An International Monetary Fund (IMF) team led by Mohammed El-Qorchi visited
Doha from October 29-November 4 to assess recent economic developments and
outlook since the completion of the 2018 Article IV consultation in May. At
the end of the visit, Mr. El-Qorchi issued the following statement:
“Qatar’s economic performance continues to strengthen. Non-hydrocarbon
output grew by about 6 percent during the first half of 2018, as the
economy recovered from the impact of the diplomatic rift and oil prices
surged. However, hydrocarbon output fell by about 1.6 percent during the
same period, culminating in overall real GDP growth of 2.3 percent. Real
GDP growth of 2.4 percent is projected for 2018 as a whole up from 1.6
percent in 2017. Headline inflation remains subdued. Fiscal and external
positions are strengthening, and the central bank’s foreign exchange
reserves have increased. Monetary and financial conditions have improved
significantly, with banks attracting non-resident flows and were able to
reduce reliance on the financial support from the fiscal and monetary
authorities. Excises would likely be put in place in 2019.
“The near- to- medium-term outlook for the Qatari economy is benefiting
from increased oil prices and prudent macroeconomic policies. We anticipate
overall real GDP growth of 3.1 percent in 2019, with still robust
non-hydrocarbon growth and recovery in oil and gas production. Over the
course of 2020-2023, real GDP growth of about 2.7 percent annually is
projected, underpinned by still significant public infrastructure spending,
expansion of liquid natural gas production, and the hosting of 2022 World
Cup. The authorities’ plan to introduce a VAT, with an implementation
target date towards the end of 2019 or early 2020. This is expected to
slightly lift prices upon implementation. Fiscal and external balances will
remain in surplus during 2019-2023, supporting additional foreign exchange
accumulation by the central bank. Nonetheless, the outlook is subject to
downside risks, including the economic and financial impact of escalated
global trade tensions, tightened monetary policy stance in the U.S., and
increased volatility in global financial markets.
“Despite higher oil prices, Qatar plans to pursue prudent fiscal policy
while taking into consideration its associated impact on the economy. The
2019 budget is expected to contain overall expenditure growth, with
continued emphasis on allocation to critical sectors (health and education.
The current account surplus is projected at about 7 percent of GDP in 2019.
QCB’s foreign exchange reserves are expected to increase further, reaching
about US$36 billion in 2019.
“Qatar’s banking sector remains sound. Foreign liabilities withdrawn in the
immediate aftermath of the diplomatic rift have been partially replaced
with greater attention being paid to the diversity of funding sources and
deposit maturity structure. Official deposits placed with banks after the
rift have been reduced. As higher oil prices and returning foreign
liabilities have enhanced banking liquidity, credit to the private sector
has been growing at a healthy pace. QCB continues to closely monitor
developments in the real estate sector in view of the softening in prices
and potential implications for the banking sector.
“Progress with structural reforms continues. The second national
development strategy highlights the need for economic diversification. The
strategy identifies priority sectors including manufacturing, financial
services, and tourism, while emphasizing competitiveness and the role of
the private sector. The Private Sector Committee is promoting
public-private partnership in areas such as food security, manufacturing,
health, and education.
“The mission team would like to express its appreciation to the authorities
and other stakeholders for their hospitality and candid discussions."
