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For Qatari residents: Do you prefer a summer or winter World Cup 2022?

Qatar to lead GCC non-oil growth in 2017-18

Written by  Author |   Sun, 08 January 2017 08:08


Led by Qatar, UAE and Kuwait, the GCC region’s non-oil growth is expected to be a decent 3 percent on average in 2017-2018.  The regional non-oil growth  is projected to rise gradually from this year to 2018 by 2.5 percent to 3.3 percent as the economies gradually digest the ongoing reforms, the regional economic outlook released by NBK noted.
On Qatar’s outlook for the first quarter of 2017, the research note said: ” Spending will still remain elevated by historical standards….Fiscal deficits will continue to be financed primarily through bond issuance, pushing central government debt well above 50 percent of GDP.”
With the outlook for  oil prices improving in 2017-2018, Qatar’s bank credit and deposit growth are also expected to pick up by 2018 and liquidity constraints to ease somewhat, though banks’ reliance on foreign deposits and rising borrowing costs represent near-term challenges.
Led by average annual double-digit increases in the construction, manufacturing, financial services and trade and tourism sectors over the last five years, the non-hydrocarbon sector has grown by an impressive 10 percent y/y on average since 2011. This is easily the most robust growth in the GCC.
With the oil price decline most pronounced in 2015, however, nonhydrocarbon growth moderated to 8.2 percent as the government pared back capital spending; projects, especially non-essential and non-FIFA-related, were streamlined.
Gross government debt (domestic and external debt) is projected to increase from an expected 60 percent of GDP in 2016 to 68.6 percent of GDP by end- 2018.  Fiscal buffers appear sufficient for the time being.
Credit growth was boosted by public sector financing demands but reduced deposit flows have led to a tightening in bank liquidity in 2016, total credit growth rebounded from the single digit lows of early 2015 to come in at a robust 11.2 percent y/y last October. Much of this was driven by the public sector (+16 percent y/y) as the government rekindled its appetite for bank credit. In contrast, private sector credit growth was on a downward trajectory for much of 2016, slowing to 7.7 percent y/y last October. Demand from industry, contractors and retail consumers has been especially weak for much of the year as the effects of the oil price downturn filter through into the consumer sector and as the demand for further real estate projects recede. Meanwhile, deposit flows into the banking system have been hit hard by the decline in oil prices.
The Peninsula
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