QNB: Qatars Economy Weathers Low Oil Prices Due to Strong Macroeconomic Fundamentals

Doha, September 19 (QNA) - Qatar National Bank (QNB) underlined that Qatars economy has weathered low oil prices due to strong macroeconomic fundamentals including a low fiscal breakeven price, the accumulation of significant savings from the past and low levels of public debt. QNB expected real GDP growth to accelerate from 3.2% in 2016 to 3.8% in 2017 and 4.1% in 2018 with the ramp up in investment spending and initial gas production from the Barzan gas project. According to QNB statement, oil prices are expected to recover over the medium term, averaging USD44.7/barrel in 2016, before rising gradually to USD55.0/b in 2017 and USD57.9/b in 2018 as declining US oil production and steady demand growth are expected to reduce excess supply. Inflation is expected to rise to 3.2% in 2016 and 3.4% in each of 2017 and 2018 in line with the pick-up in global inflation, according to QNB. International inflation is expected to rise on stronger food and oil prices while population growth should support domestic inflation. Lower hydrocarbon revenue and continued capital spending by the government are expected to result in modest deficits in 2016 and 2017, but the rebound in oil prices should gradually bring the government back to near balance by 2018, according to the statement. Revenue is expected to decline in 2016 due to the weakness in oil prices and slower non-hydrocarbon growth, but should pick up over the medium-term due to the introduction of a 5% value-added tax in 2018. QNB expected the government to continue its investment spending programme while rationalizing current spending, leading to a modest decline in expenditure as share of GDP from 2016 to 2018. The current account surplus is expected to fall to 4.1% of GDP in 2016 before rising to 6.6% in 2017 and 6.0% in 2018 mirroring the projected movement in oil prices, given that hydrocarbons account for more than two-thirds of Qatari exports, QNB said. QNB expected international reserves to be maintained at just below USD40 billion, or around seven months of prospective import cover. (QNA)