Ro­bust man­u­fac­tur­ing, higher hy­dro­car­bon out­put to ac­cel­er­ate H2 mo­men­tum: QCB

Gulf Times - Gulf Times Business - - FRONT PAGE -

Ro­bust man­u­fac­tur­ing sec­tor and higher hy­dro­car­bon pro­duc­tion will help Qatar econ­omy “sig­nif­i­cantly” ac­cel­er­ate mo­men­tum in the se­cond half of this year, ac­cord­ing to the coun­try’s cen­tral bank.

“The eco­nomic prospects look pos­i­tive and growth is ex­pected to re­cover sig­nif­i­cantly in the se­cond half of 2019,” Qatar Cen­tral Bank Gov­er­nor HE Sheikh Ab­dulla bin Saoud al-Thani, said ahead of Euromoney con­fer­ence, which will take place next week.

While many high fre­quency in­di­ca­tors such as in­dus­trial pro­duc­tion in­dex, par­tic­u­larly man­u­fac­tur­ing, PMI (pur­chas­ing man­agers’ in­dex) 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 steam, he said.

As per the lat­est In­ter­na­tional Mone­tary FundWorld Eco­nomic Out­look, Qatar’s gross do­mes­tic prod­uct is ex­pected to grow by 2% this year and a higher 2.8% in 2020.

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, Sheikh Ab­dulla said.

High­light­ing that favourable macroe­co­nomic fun­da­men­tals and fi­nan­cial sta­bil­ity will also pro­vide a growth-en­abling macroe­co­nomic en­vi­ron­ment, he said the ex­ter­nal ac­count sur­plus and fis­cal buf­fer pro­vide the nec­es­sary macroe­co­nomic strength in Qatar.

The QCB gov­er­nor said the eco­nomic growth is ex­pected to be broad-based, driven by re­cov­ery in both hy­dro­car­bon and non-hy­dro­car­bon sec­tors.

HE Sheikh Ab­dulla: Eco­nomic prospects look pos­i­tive.

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 the non-hy­dro­car­bon sec­tor.

“Qatar’s GDP growth con­tracted in the se­cond quar­ter of 2019 due to a com­bi­na­tion of global and do­mes­tic fac­tors,” Sheikh Ab­dulla said. De­spite sup­ply cuts by the Or­gan­i­sa­tion of the Petroleum Ex­port­ing Coun­tries, the global eco­nomic slow­down con­tin­ued to weigh on en­ergy prices and im­ports of many ad­vanced and emerg­ing mar­ket economies, he said.

In terms of do­mes­tic fac­tors, the ex­pected on­go­ing cycli­cal down­turn in the con­struc­tion sec­tor con­trib­uted “neg­a­tively” to the non-hy­dro­car­bon sec­tor growth, Sheikh Ab­dulla said.

The gov­ern­ment has taken sev­eral pol­icy mea­sures to help eco­nomic di­ver­si­fi­ca­tion and boost eco­nomic growth in the non-hy­dro­car­bon sec­tor. These mea­sures in­clude the new for­eign di­rect in­vest­ment law that al­lows 100% FDI in al­most all sec­tors. It will help the de­vel­op­ment of pri­vate sec­tor in Qatar. The gov­ern­ment’s sup­port mea­sures also in­clude the in­vest­ment pro­mo­tion agency to at­tract for­eign in­vest­ments in Qatar; and ma­jor in­fra­struc­ture de­vel­op­ments such as the special eco­nomic zones and Ha­mad Port to pro­vide fur­ther mo­men­tum to in­ter­na­tional trade and in­vest­ment, Sheikh Ab­dulla said.

On con­sol­i­da­tion in the bank­ing sec­tor, Sheikh Ab­dulla said the 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 said.

On fin­tech, he said Qatar’s bank­ing sec­tor is fast evolv­ing in this area to pro­vide the cus­tomers a bet­ter ex­pe­ri­ence, seam­less op­er­a­tions and thereby strengthen the econ­omy.

“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,” he said.

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