The rise in crude oil prices and positive global outlook helped reduce Qatar’s fiscal deficit and increased surplus in the 2017 current account balance.
In addition, the country’s ambitious economic diversification strategy facilitated developments of non-hydrocarbon sectors and fostered resilience of the economy against the unjust blockade, Qatar Central Bank (QCB) Governor H E Sheikh Abdulla bin Saoud Al Thani has stated.
In his introductory note to QCB’s Financial Stability Review 2017 (FSR) released yesterday, the QCB Governor said the country’s economy quickly rebounded from the unjust economic blockade through relocation and realignment of economic activities, enabled by prudent economic policies and a sound financial system.
Inflation during 2017 remained benign and was one of the lowest among GCC countries. Surplus current account balance and declining fiscal deficit even after sustained spending on infrastructure development reflects the strength of the Qatar economy, he said.
Qatar’s financial sector, in particular, the banking sector remained resilient, supported by sufficient capital buffers, low NPL ratio and healthy asset growth. With proactive support from the government and the Central Bank, the financial sector mitigated the challenges faced, after the economic blockade. The sector has since returned to ‘business as usual’ mode and regained the confidence of international investors, he said.
The broader financial sector continued to record a healthy growth, driven by insurance sector, QDB and exchange houses.
High capitalisation and comfortable liquidity among these segments underscored latent capacity for future expansion and resilience towards successful situations. Evidence did not reflect any systemic risk to the payments and settlements system. The policy measures enacted during the year underscored the liquidity infrastructure.
Going forward, Sheikh Abdulla said, policies targeted to strengthen SME sector and thrust to complete the key infrastructure projects related to 2022 World Cup are expected to improve the credit demand from both private and public sectors. He said the banking sector is adequately capitalised to support this growing demand and the regulatory framework are equipped enough to overcome any macroeconmic challenges.
QCB’s annual FSR provides a review of the events that influenced the country’s financial sector during the year. The 2017 review summarises the activities of Qatar Financial Centre (QFC) and Qatar Financial Markets Authority (QFMA). The analysis is based on the data up to the financial year 2017.