Post-blockade proves Qatar’s remarkable resilience: Al Jaida

With Qatar ticking all the right boxes of a strong economy, international investors are showing their growing confidence in the country. More than two years into the unjust blockade, leading economic indicators in Qatar are solid, Yousuf Mohamed Al Jaida, Chief Executive Officer, QFC Authority has said.

Addressing Doha Bank’s annual event “Qatar-Land of Opportunities”, Al Jaida said international investors’ confidence in Qatari economy is rising with capital investments increasing by 72 percent in just first half of 2019. Qatar’s Sovereign Wealth Fund QIA is forging ahead with its strategic investments in the US and Europe.

The country is heading to right directions. Massive policy changes and reforms are happening in the investment landscape. Qatari market is opening up in a big way. The country can soon emerge as an alternative hub for doing business, he said.

Elaborating on the ‘post-blockade resilient Qatar’, the QFC CEO noted un-hindered exports and planned increase in LNG production capacity will enable positive and stable current account surplus for the coming years.

“Qatar’s current account surplus fell sharply, almost 72 percent year-on-year in 2016 due to the sudden drop in oil & gas prices and Qatar experienced the first current account deficit in 2016. With stabilization in oil and gas prices, increasing non-hydrocarbon GDP, the current account surplus has increased by approximately 159 percent year-on-year in 2018 to reach QR60.6bn. With exports being un-hindered by the on-going economic blockade and QP’s plans to increase Qatar’s LNG production capacity, the country’s current account is estimated to be positive in the coming medium term horizon”, he said.

Despite the on-going blockade, Qatar has been successful in attracting more than $1.5bn worth of capital investment from more than 22 countries resulting in more than 60 projects. The economic blockade has not impacted QIA’s continued strategic investments in the US and Europe. In January 2019, QIA announced plans to raise investments in the US to $45bn in the next two years from around $30bn. In February 2019, Qatar announced plans of investing additional €10bn in Germany.

The QFC CEO noted Qatar’s value  of  exports  surged  25  percent in 2018 on y-o-y, defying the  blockade.  The  country’s  cumulative trade surplus is estimated to touch QR1 trillion by 2024.

Qatar successfully defended its  economy  during  the  post-blockade period. QCB’s international reserves and foreign currency liquidity surpassed the pre-blockade  levels  by  April  2019.

Due to the blockade, total official reserves  had  declined  from  $35.1bn in May 2017 to its lowest levels  at  $14.1bn  in  November 2017-droppping  (60  percent).

Since  then,  Qatar  has  demonstrated immense resilience with the total official reserves rising 160 percent by April 2019. The composition of the reserves has been  witnessed  to  be  volatile,  with  foreign  securities  share  falling  from  64  percent  pre-blockade  level  to  a  low  of  21  percent   in   April   2018   and   increasing back to 51 percent as of April 2019.

Non-Resident deposits have steadily  increased  since  2018  reaching  $48.5bn  as  at  March  2019, indicating increasing confidence  in  Qatari  economy.

Non-Resident deposits declined approximately 28 percent from $62.2bn  by  the  end  of  first  quarter  of  2017  to  $37.7bn  by  year end 2017. Since then confidence  in  Qatari  economy  has  been  steadily  rising  with  nonresident  deposits  increasing  approximately  29  percent  to  reach $48.5bn by the end of first quarter of 2019–reaching closer to  pre-  blockade  levels.

The  banks’ funding composition was better spread as at 31 March 2019 relative to pre-blockade months, with non-resident deposits representing 16 percent of funding, public  sector  deposits  at  27  percent,   and   private   sector   deposits at 32 percent.

Qatar witnessed modest real GDP growth at 1.4 percent year-on-year in 2018. Looking ahead, the IMF has projected Qatar’s real GDP will grow by 2.8 percent and 3.2  percent  in  2020.    In  the  medium term, the hydrocarbon sector  is  expected  to  realize  a  better performance due to continued  relative  recovery  in  oil  prices  as  well  as  production  expansion   plans   by   Qatar   Petroleum  (QP),  which  will  solidify the country’s position as the largest liquefied natural gas (LNG) exporter in the world.

Source from: The Peninsula