Sat, Jul 06, 2019 - Page 10 News List

Qatar’s US$200 billion dash to FIFA World Cup hits a construction cliff

Bloomberg

Qatar is experiencing economic whiplash as it winds down US$200 billion of infrastructure works to prepare for the 2022 FIFA World Cup.

Construction shrank 1.2 percent from a year earlier in the first three months of this year, contracting for the first time since the data series began, the Qatari Planning and Statistics Authority said.

Before the decline, it grew at an annual average of 18 percent a quarter since the end of 2012.

The downturn is increasingly putting the brakes on the broader economy, with output excluding oil and gas extraction rising less than 2 percent in the past six months, figures released on Thursday showed.

Qatar’s GDP has jumped 10-fold since 2000 to US$192 billion last year, World Bank data showed.

Builders have raced ahead at a breakneck pace since 2010, when the small peninsular nation unexpectedly won the rights to host the world’s most watched sporting event.

The Gulf state seized the chance to upgrade its infrastructure, building roads, metro lines and thousands of hotel rooms. Construction surged more than 30 percent at the start of 2015.

The effort helped the world’s largest exporter of liquefied natural gas weather a punishing regional boycott led by Saudi Arabia, with which it has its only land link.

Qatar dipped into its deep coffers to keep construction work on track, but the building boom that carried Qatar for almost a decade began to show signs of fizzling out late last year, ending it with a sharp slowdown as the nation enters the final stretch toward the soccer tournament.

Meanwhile, the rest of its economy is near a standstill, with mining and quarrying contracting most quarters in recent years.

As large projects such as the metro and stadiums are largely completed, “you’re going to have a couple years of lower growth,’’ MENA Advisors managing director Rory Fyfe said.

However, a turnaround might be just around the corner as Qatar expands its liquefied natural gas capacity in the next several years.

“The impact will be massive because it’s a big project in a relatively small economy,’’ Fyfe said. “It will bring in a lot of people and investment, which will begin to offset the slowdown in construction and the non-hydrocarbon economy overall.”

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