Robust manufacturing sector and higher hydrocarbon production will help Qatar economy “significantly” accelerate momentum in the second half of this year, according to the country’s central bank.
“The economic prospects look positive and growth is expected to recover significantly in the second half of 2019,” Qatar Central Bank Governor HE Sheikh Abdulla bin Saoud al-Thani, said ahead of Euromoney conference, which will take place next week.
While many high frequency indicators such as industrial production index, particularly manufacturing, PMI (purchasing managers’ index) and others have shown a marked improvement in the recent period, hydrocarbon production is also slated to increase around the end of 2019 from new project coming on steam, he said.
As per the latest International Monetary Fund-World Economic Outlook, Qatar’s gross domestic product is expected to grow by 2% this year and a higher 2.8% in 2020.
The economic outlook for 2020 remains positive as number of policy measures undertaken in the recent years are expected to boost overall economic growth and business sentiments, Sheikh Abdulla said.
Highlighting that favourable macroeconomic fundamentals and financial stability will also provide a growth-enabling macroeconomic environment, he said the external account surplus and fiscal buffer provide the necessary macroeconomic strength in Qatar.
The QCB governor said the economic growth is expected to be broad-based, driven by recovery in both hydrocarbon and non-hydrocarbon sectors. The hydrocarbon sector is likely to grow in tandem with the planned expansion of energy production in the next few years, which itself would have a catalytic impact on the non-hydrocarbon sector.
“Qatar’s GDP growth contracted in the second quarter of 2019 due to a combination of global and domestic factors,” Sheikh Abdulla said. Despite supply cuts by the Organisation of the Petroleum Exporting Countries, the global economic slowdown continued to weigh on energy prices and imports of many advanced and emerging market economies, he said.
In terms of domestic factors, the expected ongoing cyclical downturn in the construction sector contributed “negatively” to the non-hydrocarbon sector growth, Sheikh Abdulla said.
The government has taken several policy measures to help economic diversification and boost economic growth in the non-hydrocarbon sector. These measures include the new foreign direct investment law that allows 100% FDI in almost all sectors. It will help the development of private sector in Qatar. The government’s support measures also include the investment promotion agency to attract foreign investments in Qatar; and major infrastructure developments such as the special economic zones and Hamad Port to provide further momentum to international trade and investment, Sheikh Abdulla said.
On consolidation in the banking sector, Sheikh Abdulla said the QCB is focused on the viability of the proposal as well as its impact on the overall stability of the banking sector.
“Thus, the possibility of further consolidation of banks depends solely on the individual banks business strategy and for the central bank it is not desirable to stifle the creativity and drive for efficiency of the banking sector,” he said.
On fintech, he said Qatar’s banking sector is fast evolving in this area to provide the customers a better experience, seamless operations and thereby strengthen the economy.
“Fintech will bring a lot of value in creating new jobs, skills and capabilities at a time Qatar is developing towards its ambitious development goals of 2030, targeting to become a knowledge based economy,” he said.
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