(MENAFN- The Peninsula) The Peninsula
Despite siege, Qatar's economy is expected to grow at the fastest rate the region in the current year, according to the Qatar Central Bank (QCB). Qatar's real GDP (Gross Domestic Product) is projected to grow at 2.5 percent in 2017.
'Despite low global crude oil prices and a not so conducive economic environment, Qatar's economy is projected to expand at the fastest pace in the GCC region in 2017. As per the latest IMF report, real GDP growth is projected to grow at 3.1 percent in 2018, up from 2.5 percent in 2017, said H E Sheikh Abdulla bin Saoud Al Thani, Governor, Qatar Central Bank in an interview with The Euromoney Qatar Conference.
'The real GDP growth is expected to pick up on account of recovery in global crude oil prices and their positive spillover effects on both hydrocarbon and non-hydrocarbon GDP.
In the non-hydrocarbon sector, the construction sector is expected to grow as the leading sector, he added. Qatar has recently announced a visa-free entry program for 80 nationalities to stimulate the tourism sector. The available data shows inflation to remain benign in 2017 as well as in 2018, while our current account is poised to record considerable surplus, said the Governor.
'The fiscal consolidation process is expected to bring in some stability to the economy by underpinning oil and non-oil revenues. The central government deficit is expected to decline in 2018.
'Moreover, a number of measures have been taken on labour and residency reforms to bring in human capital and increase productivity and timely completion of mega projects, said the Governor.
'The improved outlook for global growth is also an important factor that could generate positive sentiment for domestic investment and GDP growth in 2018, he added. He stressed that the country is committed to maintain stability of riyal's peg to the dollar.
'QCB is committed to maintaining the stability of the Qatari riyal's peg to the US dollar.
During the past five months, the impact of the weakening US dollar and announcement of the economic blockade on domestic liquidity has been addressed by making available sufficient foreign currency resources and domestic liquidity to the banking sector, he said.
The banking sector has also improved its funding structure since June 2017 and has ample liquidity at present to support credit growth, as well to mitigate any unforeseen capital outflows, he added 'I would like to stress that the aggregate of QCB's International Reserves and foreign currency liquidity, which amounts to $35.6bn as of the end September 2017, provide us the comfort to meet Qatar's foreign currency-related payment commitments, he said.
'Furthermore, including the reserve maintained by the sovereign wealth fund, we have around $340bn of international reserves, which allow us to mitigate any pressure on the exchange rate, he added.
According to the central bank, the blockade has a limited impact on the country's financial sector. 'Data has revealed a limited impact of the blockade and, hence, we did not have to take any major measures. Clear communication of our commitment to our pegged exchange rate and our deep reserves were used to ward off speculative and motivated attacks on the currency, said the Governor.
'The initial disturbance from outflows of non-resident deposits was well absorbed by the banks through proactive liquidity management with the guidance and support of QCB, he added.
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