Doha, September 7,2014- , QNB Group has published its Qatar Economic Insight, 2014 report. The report analyzes how the economy continues its diversification phase through double-digit non-hydrocarbon growth, which is expected to accelerate through 2016.
According to the report, the economy has started a new diversification phase as large investment spending in the non-hydrocarbon sector accelerated growth to 6.5% in 2013 (6.1% in 2012) while growth in the hydrocarbon sector slowed.
The report forecasts real GDP growth to accelerate from 6.8% in 2014 to 7.8% in 2016 as hydrocarbon production grows moderately while the non-hydrocarbon sector expands at a double-digit pace on higher investment spending and a growing population.
The share of the non-hydrocarbon sector in GDP is projected to grow from 49.0% in 2014 to 57.2% by 2016.
Inflation has slowed since mid-2013 (CPI inflation averaged 2.8% in H1 2014) as rising rents were offset by lower global food prices
Nevertheless, overall inflation is projected to increase moderately to 3.4% in 2014 and 3.5% in 2015 as rising rents outweigh lower food prices
There are risks, however, of higher inflation if the economy hits significant supply bottlenecks.
The government has ramped up budgeted capital spending, driving overall investment and economic growth, while the fiscal surplus increased to 15.6% of GDP in the fiscal year that ended March 31, 2014 (2013/14).
Lower hydrocarbon revenue and rising capital spending could narrow the fiscal surplus from 8.5% of GDP in 2014/15 to 5.3% in 2016/17.
The government has recently earmarked USD182bn for project implementation over the next five years, of which USD27.4bn is in 2014/15.
Banking asset growth slowed to 9.4% in the twelve months to end-June 2014 on lower public sector borrowing; non-performing loans (NPLs) were low at 1.9% of gross loans at end-2013 and banks remained well capitalized, with the average capital adequacy ratio well above the QCB requirement under Basel III.
Bank lending is expected to rise by an average 10.7% in 2014-16, increasingly driven by the expanding population and steady deposit growth averaging 12.5%.
Low provisioning requirements and efficient cost bases will support continued strong bank profitability.
Other recent QNB Economic Insight reports include China, Indonesia, Jordan, Kingdom of Saudi Arabia, Kuwait, Oman, Qatar and UAE are available on the QNB Group website. QNB Group operates in 26 countries in Asia, Europe, the Middle East and North Africa and its economic reports leverage its knowledge of these markets to provided added value for its clients and counterparties.