THE growth momentum in Qatar’s economy continues to remain strong. Data released by several institutions have signaled that country’s economy is recovering strongly. The latest Purchasing Managers’ Index (PMI) survey data from Qatar Financial Centre and IHS Markit has indicated a sustained strong upturn in the nonenergy private sector economy at the start of 2021. Output as well as new business both rose at elevated rates, and following sustained rising demand, employment increased for a fifth successive month. Supply chains remained stable despite a ramping up of purchasing activity, and firms were also able to keep on top of levels of outstanding business during the month. Expectations regarding output over the next 12 months continued to be positive. As a further indication of businesses adjusting to healthy demand, firms raised their prices charged for goods and services at one of the fastest rates since the survey began in April 2017. PMI survey data in January this year had also showed strong growth. As per QFC data, growth rates for both business activity and new business accelerated notably during January 2021 and were among the sharpest registered since the start of the survey. Evidence of a sustained recovery was apparent as the non-oil sector geared up hiring for the longest period in the PMI’s history. January data also signalled lower average input prices, enabling firms to reduce their selling prices slightly. The overall monthly Producer Price Index (PPI) of Qatar’s industrial sector for January 2021 was estimated at 57.3 points, showing an increase of 13 percent compared to previous month’s PPI (December 2020), according to official data released by Planning and Statistics Authority (PSA). The Mining Sector PPI registered an increase of 14.3 percent in January 2021 compared with the PPI of December 2020. As per a report by Moody’s Investors Service, Qatari banks’ total operating profit rose by 4 percent to QR43.9bn in 2020, up from QR42.1bn the previous year, boosted by higher net interest income of 9 percent. However, earnings were squeezed by an 11 percent decline in non-interest income, Moody’s Investors Service said in a report published last week. The report added that capital buffers remained strong, supported by solid earnings. However, the coronavirus pressures will keep provisioning costs high for Qatari banks this year as loan quality worsens, despite resilient 2020 results, it added. Qatari banks hold strong capital buffers that have been supported by lower dividend pay-out ratios and firm earnings. These strong buffers, coupled with an oil price recovery and greater political stability, will support banks’ financial performance this year.
