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Sun 27 Nov 2016 12:37 PM

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Qatar foreign reserves 'to cover year-plus of imports'

BMI Research says Qatar’s current account will return to surplus in 2017

Qatar foreign reserves 'to cover year-plus of imports'
The West Bay skyline of Doha, Qatar. (Getty Images)

Qatar has enough foreign reserves to pay for more than a year of imports, according to a report by BMI Research.

Researchers forecast that Qatar’s current account would return to surplus in 2017, after the country posted its first deficit since 1998 this year.

However, the deficit – at 3 percent – poses “little risk to economic stability” in Qatar, as it can be financed through “tremendous” reserves and debt issuance, the report said.

From next year, the Gulf state will benefit from an anticipated rise in hydrocarbons prices.

“We believe that the worst is over for Qatar’s trade balance,” the report said. “Oil prices bottomed in January 2016 and with BMI’s analysts forecasting Brent prices to average $55 per barrel in 2017, up from $45.5 in 2016, this will prove positive for Qatar’s trade balance, the main source of foreign currency earnings in the country.”

However, any surplus achieved will still be “modest” in the coming years given continued remittance outflows from Qatar, high domestic demand for imports in the run-up to the 2022 FIFA World Cup, and the sustained low oil price when compared to past years.

Remittances outflows from Qatar stood at $12.2 billion in 2015, an 8.6 percent increase compared to 2014, said BMI. With population growth averaging 8.3 percent year-on-year in the first six months of 2016 – and expats constituting a high proportion of this – remittances are not expected to ease, the report said.

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