Qatar inflation seen benign at 3% to 4%

The International Monetary Fund projects Qatar’s inflation to stay benign at 3% to 4% going forward.

Sequencing and prioritisation of investment projects will be important, said Martin Sommer, IMF mission chief for Qatar.

If signs of overheating emerge, policymakers should hold back capital expenditures, he said.

The Qatar Central Bank can also deploy liquidity withdrawal operations and further macro-prudential measures in case of excessive credit growth or risk-taking. These measures can be supplemented with efforts to identify and remove bottlenecks. Depending on the source of inflationary pressures, these steps could include increasing housing supply, boosting port capacity, and so forth, Sommer said.

Inflation increased somewhat in late 2012 and early 2013, but has since then fallen back below 3% despite very rapid population growth, which Sommer said was “positive”. “Qatar policymakers are mindful of the 2006-08 experience with high inflation and are committed to keeping inflation low,” Sommer said.