(MENAFN- The Peninsula) Qatar's real Gross Domestic Product (GDP) growth is forecast to accelerate from 6.8 percent in 2014 to 7.8 percent in 2016, according to a latest QNB Group report.
The share of non-hydrocarbon sector in the country's GDP is projected to grow from 49 percent in 2014 to 57.2 percent by 2016 with the sector witnessing a double-digit growth. While production of hydrocarbon products is expected to continue registering a moderate growth.
The QNB Group has published its 'Qatar Economic Insight, September 2014' report. The report analyses how the economy continues its diversification phase through double-digit non-hydrocarbon growth, which is expected to accelerate over the next couple of years.
According to the report, the economy has started a new diversification phase as large investment spending in the non-hydrocarbon sector accelerated growth to 6.5 percent in 2013 (6.1 percent in 2012) while growth in the hydrocarbon sector slowed.
The report forecasts real GDP growth to accelerate from 6.8 percent in 2014 to 7.8 percent in 2016 as hydrocarbon production grows moderately while the non-hydrocarbon sector expands at a double-digit pace on higher investment spending and a growing population.
Inflation has slowed since mid-2013 (CPI inflation averaged 2.8 percent in H1 2014) as rising rents were offset by lower global food prices.
Nevertheless, overall inflation is projected to increase moderately to 3.4 percent in 2014 and 3.5 percent in 2015 as rising rents outweigh lower food prices.
There are risks, however, of higher inflation if the economy hits significant supply bottlenecks.
The government has ramped up budgeted capital spending, driving overall investment and economic growth, while the fiscal surplus increased to 15.6 percent of GDP in the fiscal year that ended March 31, 2014 (2013/14).
Lower hydrocarbon revenue and rising capital spending could narrow the fiscal surplus from 8.5 percent of GDP in 2014/15 to 5.3 percent in 2016/17.
The government has recently earmarked $182bn for project implementation over the next five years, of which $27.4bn is in 2014/15.
Banking asset growth slowed to 9.4 percent in the twelve months to June- end, 2014 on lower public sector borrowing; non-performing loans (NPLs) were low at 1.9 percent of gross loans at end-2013 and banks remained well capitalized, with the average capital adequacy ratio well above the QCB requirement under Basel III.
Bank lending is expected to rise by an average 10.7 percent in 2014-16, increasingly driven by expanding population and steady deposit growth averaging 12.5 percent.
Low provisioning requirements and efficient cost bases will support continued strong bank profitability.
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