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Qatar growth to slow - IMF
Thursday, Feb 02, 2012
Gulf News
Dubai: The International Monetary Fund (IMF) has asked Qatar to watch its “large public spending programme” as its gross domestic product (GDP) grew at 19 per cent in 2011, up from 17 per cent in 2010.
“The economic outlook for 2012 and beyond looks favourable, despite increased external risks. The main downside risks are lower hydrocarbon prices and potential disruption in transportation of liquefied natural gas [LNG] due to increased geopolitical tensions,” IMF said in its annual assessment of Qatar’s economy on Tuesday.
“Real GDP growth rate is projected to moderate to six per cent in 2012, with real hydrocarbon GDP slowing down to three per cent, as LNG production remains constant due to the self-imposed moratorium on new hydrocarbon projects. Large government investment for infrastructure would sustain growth in the non-hydrocarbon sector between nine and ten per cent beyond 2012.”
‘Slow sharply’
“Qatar’s economy nearly tripled in nominal terms between 2006 and 2011. Rapid economic growth was due to a sharp rise in natural gas production and very aggressive diversification of the country’s economy. Growth is expected to slow sharply in 2012 to about five to six per cent reflecting the attainment of gas production targets and moratorium on further exploration. Petrochemicals, transport, infrastructure, and manufacturing are expected to spearhead growth in the near term,” said Dr Giyas Gokkent, group chief economist, National Bank of Abu Dhabi.
After average deflation of around 2.5 per cent in 2010, CPI inflation is expected to average around two per cent in 2011 (end-year 2.5 per cent), with negative rental inflation being more than offset by a general increase in all other components of the inflation basket. The banking sector remains profitable and strong with a capital adequacy ratio of 22.3 per cent, average return on assets of 2.7 per cent, and non-performing loans ratio of 2.3 per cent at the end of June 2011.
“The expansionary fiscal stance in 2011-12 thus warrants careful monitoring of aggregate demand to ward off risks of inflation. Fiscal policy must continue to maintain a careful balance between spending on infrastructure to sustain non-inflationary growth, and saving and investing hydrocarbon surpluses abroad to generate sufficient income to finance future budgets,” the IMF said in its assessment.
By Saifur Rahman, Business Editor
© Gulf News 2012. All rights reserved.
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