Cautious Optimism Expected to Prevail in 2020
Doha Bank hosted a knowledge sharing session” providing a 20:20 vision for 2020” at W Hotel, Doha Qatar on 15th December 2019. The presenter at the session was Mr. Michael Cahill, Senior strategist from Goldman Sachs The event was well attended by leading corporates in Qatar.
Dr. R. Seetharaman, CEO of Doha Bank set the tone for the event by giving insight on global economy. He said “According to IMF Oct 2019, Global growth is forecast at 3.0 percent in 2019, picking up to 3.4 percent in 2020 respectively. For advanced economies, growth is projected at 1.7 percent in 2019 and 1.7 percent in 2020. The emerging market and developing economy group is expected to grow at 3.9 percent in 2019, rising to 4.6 percent in 2020.”
Dr. R. Seetharaman highlighted on Qatar economy. He said “According to IMF Oct 2019, Qatar economy expected to grow by 2 percent in 2019 and 2.8 percent in 2020 with a current account balance of 6 percent in 2019 and 4.1 percent in 2020 respectively. In 2019 the State of Qatar has achieved a successful return to the international financial markets with a total of three tranches worth a total of $12bn. Qatar expects capacity to rise to 126 million mt/year by 2027 as it starts engineering work on two “mega trains” Qatar’s banking sector remains sound. Foreign liabilities withdrawn in the immediate aftermath of the diplomatic rift have been partially replaced with greater attention being paid to the diversity of funding sources and deposit maturity structure. The Qatar Investment law of 2019 opens the way for foreign investors to own 100 percent ownership in all sectors, as well as support for investors’ entry into the Qatari market. The law offers many investment incentives including allocation of land to non-Qatari investors to establish investment through the use or rent in accordance with the applicable rules and regulations. In March 2019 the Cabinet, approved a draft resolution of the Council of Ministers determining the areas and places in which non-Qataris are allowed to own and use real estate. In April 2019 Cabinet has approved draft law on public-private sector partnership. Qatar’s Baladna IPO oversubscribed.”
Mr. Michael Cahill gave insight on global growth in 2020. The easing financial conditions, diminishing trade uncertainty, inventory correction in manufacturing sector and country specific developments such as in UK or Russia are the key factors to improve growth in 2020. However political uncertainty still prevails in 2020. Easing financial conditions help US economy better than other developed economies. Chinese economy is bouncing back but not yet seen the acceleration. Political uncertainty can impact trade and investment. Chinese stimulus is lot more restrained. In US the housing sector is more sensitive to interest rates. Strong labour market is required for US economic growth. UK can benefit from reduction in uncertainty of Brexit risks .A better growth in 2020 from US economy can contribute to strong dollar. On the commodities segment too much of investment which will come off as part of the deleveraging cycle. Fed rate hike may be possible only if the inflation starts increasing.”
In his concluding remarks, Dr. R. Seetharaman said “Cautious optimism expected to prevail in 2020.”