IMF pegs Qatar's growth to 6pc in 2014

March 10, 2014 - 2:56:53 pm

DOHA: The International Monetary Fund (IMF) expects Qatar's Gross Domestic Product (GDP) growth to stay around 6 percent in 2014 with a positive short and medium-term economic outlook.

The IMF also expects that Public investments will maintain growth around 6-7 percent over the medium term, with non-hydrocarbon growth remaining around 10 percent.

The inflation rate will be a harmless 3 to 4 percent. 

The Fund expects commodity prices, including food, to decline.  

This should help reduce price pressures from strong economic activity in the context of the exchange rate peg.

The IMF yesterday presented its preliminary assessment of the 2014 Article IV Consultation mission to Qatar held on February 19 and 20.

IMF projections expects public debt ratio to fall, but the headline budget balance could turn into deficit over the medium term, while the current account surplus could drop to 5 percent of GDP.

Qatar's recent macroeconomic performance remains strong though GDP growth slowed from 13 percent in 2011 to 6.2 percent in 2012. 

This is due to the long-standing self-imposed moratorium on additional hydrocarbon production from the North Field, the IMF said.

A 10 percent expansion in the non-hydrocarbon sector, particularly construction, transport, communications, and finance kept the growth steady around 6 percent in 2013.

The non-hydrocarbon sector and strong revenue growth ensured the fiscal year 2012/13 budget surplus increased to 9 percent.

Spending on infrastructure and other capital projects remained unchanged, but capital expenditures picked up during the current fiscal year.

The IMF projects gross government debt for FY 2013/14 (ending March 2014) at 33 percent of GDP, with the authorities issuing T-bills and T-bonds for financial market development and liquidity management purposes.

The IMF expects Qatar's current account to record another high surplus after it recorded a surplus of 32 percent of its GDP in 2012.   

This reflects sustained high prices of LNG, crude oil, and condensates exports. 

IMF indicates that LNG prices in Qatar's main export markets in Asia have so far remained largely unaffected by the rapid growth in the US unconventional gas and oil production.

Qatar's marco-economic risks, baseline are mostly related to the ongoing public investment programme, the IMF said.

The investment projects are essential to propel non-hydrocarbon sector growth and facilitate economic diversification that is the country’s vision.

IMF underlined that Qatar has a policy and fiscal buffers to address short-term risks arising out of global financial market volatility. 

Qatar's natural resources are sizeable and spending is unlikely to be affected by a drop in hydrocarbon prices or market volatility in the near term.

The Qatar Central Bank can inject liquidity into the financial system through its lending window and repo operations. 

And the government could achieve the same goal by managing portfolio allocations of the Qatar Investment Authority and public sector enterprises, the IMF said in conclusion. (QNA)