Growth to slow from 6.6% last year but still strong, says International Monetary Fund
Economic growth in Qatar remains strong but will slow to 5.2 percent this year from 6.6 percent last year, the International Monetary Fund has said in a new report.
The IMF's executive board said the Gulf state would see "robust nonhydrocarbon growth" with inflation rising only gradually over the medium term.
It added that the main downside risks are lower hydrocarbon prices, tightening of external financing conditions, and potential disruption in transportation of LNG due to increased geopolitical tensions.
The IMF report said growth in the nonhydrocarbon sectors will range between 9-10 percent over the medium term, while the hydrocarbon sector is projected to grow between -1.1 percent and 3.5 percent over the same period.
"As infrastructure-related construction activities pick up, as the demand-supply situation in the real estate market converges, and as the expatriate population increases, inflation will gradually increase from 3 percent in 2013 to 5 percent by 2016," it added.
The IMF also said Qatar's fiscal and external surpluses are projected to taper down significantly, due to flat LNG and a declining trend in crude oil production and exports, and due to higher fiscal expenditure.
The report said the Gulf state's banking system remained "highly capitalised and profitable" while nonperforming loans declined from two percent to 1.7 percent in June 2012.
IMF executive directors welcomed Qatar’s continued strong macroeconomic performance, underpinned by "sound policies and growth in the nonhydrocarbon sector".
Directors commended the authorities’ focus on advancing economic diversification and growth in nonhydrocarbon sectors.
They also welcomed the adoption of a three-year budget framework to help shield government spending from revenue volatility and enable better use of resources.