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Qatar Industrial production April 2024

Qatar: Industrial activity records largest decline in six months in April

Industrial output nosedived 5.9% year on year in April (March: -0.2% yoy), the quickest rate of shrinkage in six months. Looking at the details of the release, both energy and manufacturing output fell. The contraction in energy output, which was the sharpest since October, was largely due to a drop in natural gas production.

Meanwhile, the trend pointed down, with the annual average variation in industrial production flat in April—its worst performance in more than two years—down from growth of 0.7% in March.

Our Consensus is for the gross value added of the industrial sector to grow slightly more sharply in 2024 than in 2023, bolstered by the government’s infrastructure push. Oil and liquified natural gas (LNG) output is likely to remain approximately stable. From 2026, the industrial sector should accelerate further as LNG output picks up. The latter will be boosted by the North Field expansion project, the first phase of which is set to open that year.

In early June, state-owned energy firm QatarEnergy agreed to sell a share in the first phase of the North Field project to CPC, a Taiwanese state-owned energy firm. It also agreed to supply CPC with 4 million tonnes of LNG per year for 27 years.

EIU analysts commented on the outlook:

“The North Field East LNG expansion project will be a major driver of the economy throughout 2024-28. This will initially take the form of heavy investment spending, with the engineering, procurement and construction contract for the first two phases of the project valued at US$10bn. Further impetus will be provided by the recent announcement of a third phase to the project. Once the extra LNG output starts to come on stream, starting in 2026, there will be a growing boost to real GDP growth. The surge in 2027 will be particularly pronounced.”

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