Mubasher: The National Bank of Kuwait (NBK) on Monday issued a report about its revised expectations of the economic growth in Qatar in the light of current dispute with other Arab countries.
NBK expected the GDP growth is down to 1.8% this year, the weakest since 1994, on fallout from the GCC dispute, however; the growth in 2018 will pick up sharply to 4.0% if the giant Barzan gas project comes on stream as scheduled.
Non-oil growth declined to 4.0% from 5.3% before, because of major disruption to trade and tourism, a spike in food prices, currency and stock market pressures, credit rating downgrades, and damage to corporate earnings, the report added.
The growth in the hydrocarbon sector in 2017 also dropped to -0.5% from -0.3%, on tighter-than-expected discipline with respect to crude output targets, the report continued.
The trade blockade resulted in a sharp rise in food price inflation to 4.5% year-on-year in July from -0.1% in June, driven by a combination of supply shortages and increased transit costs as supply chains were re-routed.
The report also noted that the fiscal deficit is narrowing to 5.0% of GDP in 2017 from 9.0% of GDP in 2016, with 18% rise in revenues driven by rising oil and gas prices.
The government has been leaning on debt to finance deficit rather than drawing down its vast $320 billion reserves managed by the Qatar Investment Authority (around 200% of GDP).
Outstanding government external debt stood at $32 billion in June (20% of 2017 GDP), and domestic debt at $78 billion (48% of GDP).
The report highlighted that the government avoided additional sovereign issuance in 2017, following its $9 billion bond issue in May, however; it borrowed $5 billion direct from local banks.
