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Qatari economy to expand further despite challenges

Qatari economy to expand further despite challenges
Qatar’s inflation is projected to rise to 3.0% and 3.1% in 2016 and 2017 respectively (Photo Credit: Arabianeye-Reuters)

Mubasher: Qatar's economy is likely to maintain its expansion in the coming few years despite the slowdown in non-hydrocarbon sector activity observed against lower energy prices and government fiscal restraint, according to National Bank of Kuwait's (NBK) economic update.

Investment in the government’s $200 billion (QAR 728.26 billion) infrastructure development plan, including FIFA World Cup 2022 projects, will continue to drive economic growth.

The hydrocarbon sector is also forecasted to be backed by the commissioning of the Barzan gas production facility, which will supply additional volumes of gas for domestic use and petroleum products for export.

Qatar’s inflation is projected to rise to 3.0% and 3.1% in 2016 and 2017 respectively, from 1.6% in 2015 (on an annual average basis).

The authorities embarked on a concerted round of fiscal consolidation due to sharply reduced oil and gas revenues since 2014 (-30% year-on-year on average).

However, this will not be enough to avoid registering Qatar’s first fiscal deficit, equivalent to -4.7% of GDP, in 2016, the report highlighted.

The government tried to shift the burden of deficit financing away from its foreign reserves and towards the debt markets, where it has been an active participant to the tune of $11.6 billion in 2016.

In May, Qatar saw the largest sovereign issuance of a $9.0 billion triple-tranche USD-denominated international bond. Along with $2.6 billion in sovereign domestic bonds and sukuk plus a $5.0 billion syndicated loan secured earlier in the year.