Qatar’s economic growth poised to pick up in 2017

The recovery in oil price and a strong expansion in non-hydrocarbons sectors will help Qatar effectively manage future interest rate hikes, helping the country’s economic growth to pick up this year, according to a report by the Qatar Investment Fund (QIF).

“The investment adviser expects Qatari economic growth to pick up in 2017, amid the recovery in oil prices and a strong growth in the non-hydrocarbon sector,” the QIF report for the fourth quarter of 2016 said.

“This should help the economy to face the rate hike over the course of the year,” QIF was quoted as saying by Gulf Times.

The US Federal Reserve hiked its benchmark interest rate for the second time in a decade by 25 basis points in December 2016 on indications that the American economy is expanding at a healthy pace. Subsequently, Qatar Central Bank (QCB) had also made a similar increase.

The QIF report said Qatari banks are expected to witness higher credit growth led by upcoming projects related to the FIFA 2022 World Cup and the Qatar National Vision 2030. Banks are also expecting liquidity conditions to ease on higher government revenue due to the rise in oil prices.

QCB’s data shows that banks in the country are in "good" shape, with credit growth up 12.1% and deposits up 11.8% to the end of December 2016.

QIF believes that the current positive outlook for the oil market and efficiency in current expenditure will help control the fiscal deficit. Infrastructure spending should continue to fuel non-hydrocarbon growth and attract new expatriate workers, supporting domestic consumption.