São Paulo – The Qatari economy is solid, the banks are capitalized and growing, but still there are challenges: local authorities must monitor the increase in inflation rate. These are the conclusions included in a report released last Wednesday evening (16) by the International Monetary Fund (IMF), covering the performance of Qatar’s accounts in 2012, and forecasts for 2013.
According to the IMF, the non-oil and gas-related portion of the Qatari economy grew by 9% in 2012 and should replicate the performance this year. The growth was a result of economic diversification into sectors such as civil construction, transportation, communication, trade, services and hotels, the report claims.
The oil industry, in turn, will see a decline in performance, and may go from a 1.1% decline to 3.5% growth in the medium term. In 2013, a 0.4% growth rate is expected because in addition to diversifying its economy, Qatar has trimmed down gas extraction. The country’s banks are capitalized, and the rate of non-performing loans went from 2% by June 2010 to 1.7% in June 2012.
Despite a stable economy, Qatar is faced with risks. According to the IMF, inflation should go up in the country. By the end of 2012, inflation was up 2%, but it should rise faster this year. According to the fund, prices will be pushed up by infrastructure works, the real estate market, and the rising expatriate population. Inflation is expected to be at 3% in 2013 and increase gradually until it reaches 5% in 2016.
On the other hand, the fiscal and external surpluses are expected to drop, due to limitations in gas production, and a downward trend in crude oil production and exports.
The challenges facing Qatar notwithstanding, the IMF directors lauded the country’s macroeconomic policy management, and the efforts of local authorities to cut spending and cushion the country’s account from external crises.
“They welcomed the authorities’ commitment to increasing fiscal savings in the medium term for building buffers against shocks, saving for future generations and fully financing the budget after 2020 from non-hydrocarbon revenues,” according to the release.
*Translated by Gabriel Pomerancblum
