UPDATE 1-Qatar lifts 2013 economic growth, inflation outlook

* Hydrocarbon output to fall less than originally thought

* Inflation now seen at 3.5 pct instead of 2.5 pct

* Infrastructure projects to boost housing costs

* But Qatar says can use regulation, liquidity to curb CPI

By Andrew Torchia

DUBAI, Dec 23 (Reuters) - Qatar raised its forecast for economic growth next year and said that while prices would rise considerably as huge infrastructure-building plans gained speed, it could contain inflation.

Gross domestic product, adjusted for inflation, is now forecast to expand 4.8 percent in 2013 instead of the 4.5 percent which authorities predicted in June, the General Secretariat for Development Planning said on Sunday.

That growth rate, down from an estimated 6.3 percent in 2012, would be Qatar's lowest since 2002, according to International Monetary Fund data.

A period of heavy investment in Qatar's oil and gas resources has ended, meaning it will move closer to the growth rates of other Gulf Arab energy exporters, the planning authority said in a statement.

But oil and gas output next year is likely to decline less than originally thought, by 0.2 percent instead of 1.2 percent, largely because of more crude oil production. Infrastructure building will also accelerate, taking construction sector growth to a double-digit rate, the authority said.

Qatar plans to spend tens of billions of dollars by 2020 on railways, roads, utilities and facilities to host the 2022 soccer World Cup, but partly because of bureaucratic obstacles, projects have started more slowly than businessmen had hoped.

The authority predicts Qatar's state budget spending next year will climb 9.5 percent to 255.8 billion riyals ($70.3 billion); within that, capital spending would rise 10.4 percent to 85.9 billion riyals.

Although Qatar is vulnerable to any downturn in oil prices, the authority calculated the price of crude oil, now above $100 a barrel, would have to drop below $50 to shift its budget surplus into a deficit next year.

It saw the main economic risk as geopolitical, an apparent reference to Iran's threats to close the Strait of Hormuz in the event of conflict over its disputed nuclear programme.

"Should geopolitics develop in a way that disrupts the free flow of gas and oil, the financial resources available to the state will be affected," the authority said, adding that in this case Qatar could mobilise its reserves. Analysts estimate its sovereign wealth fund has over $100 billion of assets.

INFLATION

While the infrastructure building scheme will keep Qatar's economy growing, companies and workers pouring into the country to handle the projects are likely to push up residential rents.

The authority now expects consumer price inflation to rise to 3.5 percent in 2013 from 2.0 percent this year; in June, it had predicted 2013 inflation of only 2.5 percent.

The rental component of the consumer price index bottomed out in April-May this year and by August rents had climbed above their year-ago level, adding about 0.5 percentage point to inflation this year, the authority said.

It said officials could use a combination of regulation and action by the central bank, which has been issuing Treasury bills to absorb excess funds in the money market, to avert overheating. "Inflation remains mild and is unlikely to present a threat to macroeconomic stability," it said.

"The authorities will continue to deploy their regulatory powers to prevent traders imposing unjustified hikes on consumer prices. The central bank has been vigilant in managing credit growth and has a full armoury of effective tools."

An earlier explosion of bank loans to the real estate sector led some analysts to fear a bubble, but the authority said year-on-year growth in commercial banks' credit to private construction and real estate firms had dropped to 8.3 percent in October from above 40 percent around the end of last year.