Qatar’s Resilience Showcased at SIBOS
Dr. R. Seetharaman, CEO of Doha Bank participated at the SIBOS 2018 Conference held at Sydney, Australia last week. At the Conference he gave insight on developments in Global Economy & Qatar economy. In relation to Global Economy he said “According to IMF Oct 2018 outlook, Global growth is projected at 3.7 percent for 2018 and 2019 respectively. Growth in advanced economies will remain well above trend at 2.4 percent in 2018, before softening to 2.1 percent in 2019. Growth in the emerging market and developing economy group is set to remain steady at 4.7 percent in 2018 and 2019 respectively. The key challenges to Global Economy include rising trade barriers & a reversal of capital flows to emerging market economies with weaker fundamentals and higher political risk. While financial market conditions remain accommodative in advanced economies, they could tighten rapidly if, trade tensions and policy uncertainty were to intensify.
Monetary policy is also another potential trigger. Tighter financial conditions in advanced economies could cause disruptive portfolio adjustments, sharp exchange rate movements, and further reductions in capital inflows to emerging markets, particularly those with greater vulnerabilities. Avoiding protectionist reactions to structural change and finding cooperative solutions that promote continued growth in goods and services trade remain essential to preserve and extend the global expansion. With global debt levels well above those at the time of the last crash in 2008, the risk remains that unregulated parts of the financial system could trigger a global panic.”
On Qatar economy, Dr. R. Seetharaman said “Qatar expected to grow by 2.7% in 2018 and 2.8% in 2019 respectively. Qatar is planning to increase its LNG production capacity from 77Million tonnes per Annum (MTPA) to 110 MTPA. According to IMF, Qatar’s banking system needs no further support from the central bank and sovereign wealth fund as the decline in non-resident liabilities of lenders have subsided. A robust regulatory framework and effective supervision have helped ensure the resilience of the financial system, the IMF said the QCB is further strengthening its financial sector surveillance to detect in a timely fashion emerging pressures, including those related to liquidity, real estate sector, the impact of US monetary policy normalisation and the on-going Gulf crisis. Qatar’s reserves are more than twice of its GDP and in terms of financial stability Qatar is strong, stable and functional. In response to the economic blockade Qatar has emerged strong and has brought various reforms to transform itself into a self-reliant economy. The 2018 budget assumes the same conservative oil price of $45/barrel as used for the 2017 budget. The monetary and fiscal policy was aligned. Qatar National Vision focuses on four pillars 1) Human Development 2) Social Development 3) Economic Development and 4) Environmental Development. In recent times Qatar’s long-term issuer ratings have been changed from negative to stable by Moody’s Investors Service, which affirmed the long-term issuer and foreign-currency senior unsecured debt ratings at Aa3. According to Moody’s assessment, Qatar can withstand the economic, financial, and diplomatic boycott by Saudi Arabia, the UAE, Bahrain, and Egypt in its current form, or with possible further restrictions, for an extended period of time without a material deterioration of the sovereign’s credit profile.”
Dr. R. Seetharaman gave insight on key areas from Qatar National development strategy 2018-2022. He said “The government will focus on securing the capital spending required for all major projects, including those related to hosting the FIFA 2022 World Cup, but within prudent budgets. In parallel, the government will undertake policy reforms towards enhancing the business environment, encouraging private sector participation in knowledge-based sectors. The private sector is expected to respond positively to these reforms and increase its investments in the local economy. Qatar recognizes the importance of developing an FDI legislation and other legislation that stimulates private sector participation to invest in economic infrastructure, placing it at the forefront of its priorities to maintain its rates of economic growth.”