Transcript Slide 1

QATAR ECONOMICS OUTLOOK
AND PROSPECTS
Sh. Abdullah bin Soud Al Thani
The Governor
Qatar Central Bank
Adam Smith Seminar
Paris, France, November 13-14,2007
Outline
Qatar in brief.
Economic Growth and Per Capita Income.
Public Budget: Revenue, Expenditure and Surplus.
Current Account Surplus.
Inflation.
Monetary Policy.
Banking performance.
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Qatar in brief
History : Qatar became
independent on September 3rd
1971.
Geography: Qatar is suited
halfway along the west coast of
the Arabian Gulf.
Population: estimated to be
about less than one million
habitant in 2007.
Capital: Doha
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Qatar in brief
 Qatar is a small peninsula in the Arabian Gulf and it is
a member
of the Gulf Cooperation council. Its total
area is about 11.5 thousand kilometer and total
population is estimated to be about less than one million
habitant in 2007.
 With GDP exceeding $ 52 billion, Qatar becomes the
richest country in the world as its per capita income
soared to $ 62 thousand annually.
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Economic Growth
 Qatar real economic rate of growth was 9% annually
in the previous five years, driven by expansion in the
production of liquefied natural gas (LNG), and by strong
activity in construction and financial services.
 Nominal GDP rate of growth ranged between 10.434.8% since 2002.
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Economic Growth
Qatar economic growth (2002-2006)
items (%)
2002
2003
2004
2005
2006
Real
7.1
3.5
20.8
6.1
7.1
Nominal
10.4
21.5
34.8
33.8
24.2
Qatar Economic Growth
40.0
35.0
30.0
25.0
20.0
15.0
10.0
5.0
0.0
2002
2003
2004
Real
2005
2006
Nominal
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Economic Growth
 Qatar's macroeconomic performance is expected
to remain strong in 2007. High oil and gas prices
and ongoing investments to expand capacity in the
gas sector are projected to maintain strong GDP
growth in the coming years.
 The gas sector investments covered both up
stream projects especially the LNG and GTL
projects while, down stream projects concentrating
on building petrochemical complexes.
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Public Budget
Both public revenue and expenditure have soared
strongly in the recent years. The 2007/2008
expenditure is estimated to exceed $ 19.1 billion and
the public budget projects a surplus of 2.8% of the
GDP.
As oil price stabilizes above $40 per barrel, public
budget will maintain in surplus in the coming years.
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Public Budget
$ bn
Actual
Items
Budget
2004/2005
2005/2006
2006/2007
2007/2008
Total Revenues
15.1
17.9
22.7
19.9
Total Expenditures
10.0
14.0
19.1
18.1
Surplus
5.2
3.9
3.6
1.9
Public Budget
25
$ bn
20
15
10
5
0
2004/ 2005
2005/ 2006
Tot al Revenues
2006/ 2007
2007/ 2008
Tot al Expendit ur es
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Current Account
Current account of the Qatari balance of payment
has been in surplus in the previous ten years.
The balance of payments position is expected to
strengthen further, with the external current account
surplus increasing to 31% of the GDP in 2007.
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Current Account
$ bn
Items
2002
2003
2004
2005
2006
Current Account
4.0
5.8
7.6
7.5
9.5
Overall Surplus
1.8
4.2
4.0
4.5
5.4
Overall Surplus
6
5
$ bn
4
3
2
1
0
2002
2003
2004
2005
2006
Overall Surplus
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Inflation
Due to the rapid growth imbalances and bottlenecks
in the real estate sector, Inflation has escalated in the
period 2003-2007.
CPI inflation jumped from just 0.24% in 2002 to
reach 11.8%in 2006 and rose to an annualized level of
12.85% by the second quarter of 2007.
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Inflation in Qatar
Consumer Price Index in Qatar (2002-2006)
2002
2003
2004
2005
2006
100.2
102.5
109.5
119.1
133.2
Rate of inflation
0.2
2.3
6.8
8.8
11.8
Rent & Fuel
101.8
120.1
139.6
176.2
221.9
Rent and fuel rate of
change
1.8%
18%
16.2%
26.2%
25.9%
General Index
base year2001=100
Source: QCB, database
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Monetary Policy
Monetary conditions were characterized by ample
liquidity and strong credit growth in the previous
years. Broad money growth averaged 34% a year
during 2004-06 and is projected to grow at about 41%
in 2007.
Money supply growth was due to large increases in
net foreign assets and increasing credit to finance
private and public investments.
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Qatar Domestic Liquidity
$ bn
items
2002
2003
2004
2005
2006
Domestic
liquidity (M2)
8.8
10.2
12.3
17.7
24.4
Rate of change
12%
16%
21%
43%
38%
Domestic liquidity (M2)
30
25
$ bn
20
15
10
5
0
2002
2003
2004
2005
2006
Domestic liquidity (M2)
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Monetary Policy
The Qatari riyal pegged to the U.S. dollar (at 3.64
Riyal for each dollar) and complete capital mobility,
nominal interest rates in the domestic market have
tracked corresponding U.S. rates closely.
QCB interest rates framework encompasses three
market-oriented policy rates. QMR (QATAR
MONETARY RATE) integrates overnight lending
and deposits standing facilities into a mechanism
designed to navigate overnight money market rates
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Banking Performance
Banks complied with the QCB's prudential norms
and put into place risk management frameworks to
implement Basle II.
Qatar banking sector is highly matured in terms of
corporate governance, regulatory framework and
integration with other sector.
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Banking Performance
Macro-prudential indicators of the banking sector
remain strong:
The average capital assets ratio of commercial banks
(CAR) remained high at 15% as of end-2006.
The gross nonperforming loan ratio declined to 2.2%,
from 4.3% at end-2005.
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Banking Performance
Banking sector in Qatar has been one of the faster
growing sector, expanding in line with economic
growth of the country, in 2006 total assets grew by
47% and the shareholders equity grew by 34% and
capital grew by 148%, as compared to the
previous year.
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Banking Performance
The banking sector's profits increased substantially
in 2006. Led by robust growth in credit.
Return Equity (ROE) increased to 13.87% in the first
half of 2007 while Return on Assets (ROA) reached
1.88%
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Banking Performance
Item
H1-2005
H2-2005
H1-2006
$ bn
H2-2006
H1-2007
Net Profit
0.54
0.76
0.84
0.77
1.12
ROE(%)
12.03
14.9
14.81
11.13
13.87
ROA(%)
1.79
2.14
2
1.48
1.88
Banks net profit 2005-2007
ROE & ROA 2005-2007
1.20
20
15
10
5
0
1.00
0.80
0.60
0.40
0.20
0.00
H1-2005
H2-2005
H1-2006
Net Profit
H2-2006
H1-2007
H1-2005
H2-2005
H1-2006
ROE(%)
H2-2006
H1-2007
ROA(%)
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Doha Securities Market
Doha Securities Market index experienced a
significant correction in 2006, reversing the 70
percent increase occurred in 2005.
With a loan exposure to the equity market was
limited, the direct effect of the correction in the
banking system was minimal
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Doha Securities Market
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