DOHA: H E Sheikh Abdulla bin Saoud Al Thani, Governor of Qatar Central Bank (QCB) has stated that Qatar’s economic outlook is positive and the growth is expected to recover significantly in the second half of 2019.
“While many high frequency indicators such as industrial production index (IPI), particularly manufacturing, PMI 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 stream. ”, the QCB Governor said. Citing IMF report Sheikh Abdulla added that Qatar’s GDP is expected to grow by 2.0 percent in 2019.
In an interview to the Euromoney, ahead of the latest edition of Euromoney Qatar Conference, the QCB Governor noted that the contraction in Qatar’s Q2-2019 GDP growth was due to a combination of global and domestic factors. Despite supply cut by the Opec plus group, the global economic slowdown continued to weigh on energy prices and imports of many advanced and emerging market economies. In terms of domestic factors, the expected ongoing cyclical downturn in construction sector contributed negatively to non-hydrocarbon sector growth.
Sheikh Abdulla noted that 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. Favourable macroeconomic fundamentals and financial stability will also provide growth enabling macroeconomic environment. The external account surplus and fiscal buffer provide the necessary macroeconomic strength in Qatar. In fact, as per the latest IMF – WEO report, Qatar’s GDP growth is projected to improve to 2.8 percent in 2020, which would be one of the fastest in the GCC region.
Furthermore, he added, the economic growth is expected to be broad-based, driven by recovery in both hydrocarbon and non-hydrocarbon sector. 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 non-hydrocarbon sector. At the same time, number of policy measures undertaken to help economic diversification, will boost economic growth in the non-hydrocarbon sector.
These policy measures include stepss undertaken to promote wholesale trade, small and medium scale enterprises and agriculture and allied activities; the new FDI law; and setting up of investment promotion agency to attract foreign investment in Qatar.
Major infrastructure developments such as the SEZs and Hamad Port will provide further momentum to international trade and investment. The network of express highways and logistics centers that are located strategically in various locations of the country will help in economic diversification process.
The QCB Governor pointed out that Qatar has been one of the 20 countries in the world in terms of improvement in terms of ‘ease of doing businesses’ in the latest World Bank report.
Responding to the question “Will there be more bank consolidation in Qatar?” the QCB Governor said: “Consolidation of banks take place either as a directive from the authorities (Central bank, Government, etc.,) to maintain financial stability or as a business strategy of the participating banks to reap the benefit from improved efficiency through diversification of balance sheet. The merger of two bank in Qatar was of the second type, where the banks came out with the consolidation proposal and Qatar Central Bank provided the necessary approval after conducting legal and financial due diligence.”.
As a regulator of the banking sector, 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 added.
To the question that “how important is Fintech to the future of Qatari banking and finance?” the QCB Governor said: “ A series of game changing technological innovations with the arrival of smartphones and linked applications transformed the way we live and became part of our daily lives. This created a large gap in what banks and financial institutions were able to offer vis-à-vis the customer’s expectation, in particular when it came to convenience and user experience. Fintech revolution is poised to fill this gap.” The Qatar banking sector is fast evolving in this area to provide the customers a better experience, seamless operations and thereby strengthen the economy. Along with the financial sector, the entire supporting infrastructure will need to be ready to accompany such changes. Banking sector will surely benefit from this transformation as it will help them to create better, faster and cheaper services. 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.
Fintech in Qatar is about both implementation and innovation. For years Qatar has been relying on various technologies at multiple levels. Therefore it is quiet natural that the industry here grows out of existing solid technological solutions.
There are numerous challenges in the financial sector that may create opportunities for such innovation to take place. These challenges can be solved via internal innovation processes, open innovation models, acquiring innovative start-ups for example, or with the involvement of the academic/research institutions. With a strong emphasis on the research agenda, Qatar has been pushing towards homegrown research and development, this could eventually benefit the financial sector too.
“In order for the banking sector to play a role in the innovation landscape, it will need to focus on more collaborative, open and invest in ideas and projects. Some of these will need to go a step further in the future, to build ties with those in different industries and with different outlooks, and to identify new ways to generate value”, Sheikh Abdulla said.
Source from: The Peninsula