Transport Forecasts Reveal Direction Of Growth
BMI View: Our new forecasts for Qatar's transport infrastructure industry value suggest that the transport segment is now a key driver of growth in the infrastructure sector, something which will only increase in the run up to the Fifa 2022 World Cup. Our new forecasts are tied to and corroborated by our Key Projects Databases, which highlights the major upcoming opportunities in the ports and railways sector in particular, with the New Doha Port Project and Doha Metro set to drive growth over the medium term. One area of weakness going forward will be the airports sector, as the Hamad International Airport reaches completion in 2014, with no major projects to replace it. We forecast that with US$55.6bn of transport projects in our Key Projects Database at the planning stage or under construction, real growth will average 4.7% up to the end of our forecast period in 2023.
Qatar has entered a phase of unprecedented spending on transport infrastructure; the development of the country's network has the dual aims of stimulating the economy's diversification, by better connecting Qatar to global trade networks, and also to facilitate the preparations for the Fifa World Cup. Qatar, like its regional peers in the Gulf Cooperation Council (GCC) has invested heavily in airports and is continuing to invest in its new port so as to capture a share of the lucrative transhipment opportunities in the region. Likewise, with Qatar's economy and population growing and an expected influx of visitors for the World Cup, the existing transport network is to be placed under increasing pressure and as such the country is developing its road and rail networks. We forecast that across the sector, with US$55.6bn of transport projects in our Key Projects Database at the planning stage or under construction, real growth will reach 6.9% year-on-year (y-o-y) in 2014, and average 4.7% up to the end of our forecast period in 2023.
We note that while risks in the transport sector are few as the government has the budget to see projects realised, the potential for delays and cost overruns is increasing and unlikely to get better over the medium term. The reliance Qatar has for foreign project management and international construction firms, especially for the more technically challenging projects, has led to a shortage of consultant-level labour. Subsequently, there have been delays in bringing projects to the construction phase and labour prices have inflated - a trend we expect to continue over the short-term at least as more projects move into the construction phase.
|Transport Key Piece Of Infrastructure Puzzle|
|Transport Infrastructure Industry Value (QARbn) and Real Growth (% Change y-o-y)|