Credit and bank deposits register growth in July-QNB Monthly Monitor

 

 

Indicating increasing and rising economic activities, banking sector in Qatar recorded a credit growth of 3.5% y-o-y in July 2018. According to the latest QNB Qatar Monthly Monitor, bank deposits have seen a 5.3% growth y-o-y in July.

Though the public sector deposits with local banks have seen a 6.9% decline m-o-m in July, deposits from non-residents and private sector grew 6.1% and 2.2% m-o-m respectively in July, said the QNB report. Also, the broad money supply (M2) grew 10.3% y-o-y in this GCC country in July.

 Key inter-bank rates continued to hold steady, while Qatar’s 5-year credit default swap (CDS) spread edged down to 82bp; its lowest since March, stated the report.

According to QNB Qatar Monthly Monitor report, in the first quarter of the year, the real GDP growth slowed in Q1 thanks to a further fall in hydrocarbon output. Non-hydrocarbon GDP growth was a solid 4.9%, y-o-y.

 Booming construction output, up 17.2% y-o-y, remained the key driver of activity in the non-hydrocarbon sector, QNB report showed.

 Manufacturing gained 3% year-on-year in the first quarter. However, the real estate price index slipped back further in June. Consumer Price Index (CPI) inflation held broadly steady at 0.6% y-o-y in August, it said.

 Qatar’s population increased 4.7% y-o-y to stand at 2.56mn in August; women made up close to 24.6% of the population.

Summer months being lean period with less activities and drop in tourist arrival, in the hospitality sector, 5-star and 4-star hotel occupancy rates dipped slightly in July to stand at 55% and 60% respectively.

Advantageous oil prices have had a positive impact on Qatar’s fiscal and external balances, according to the QNB report. The country’s fiscal account turned to a surplus in the first quarter (Q1) as revenue rose in line with higher oil prices.

 Qatar’s current account surplus widened to 7.3% of GDP in the first quarter while the financial account deficit narrowed.

 Exports grew 45.3% y-o-y in July amid higher oil prices, while imports surged 50% year-on-year due to the base effect from last year.

 Foreign exchange reserves held by Qatar Central Bank (QCB) rose 0.3% m-o-m to reach $45.4bn in July, equating to seven months of import cover.

 Brent crude prices slipped to an average of $73.8/barrel in August, the report said and noted Qatar’s oil production rose to 622,000 barrels per day (bpd) in June from 601,000 bpd in the previous month.

The near-term Qatar growth outlook is broadly positive, said IMF. It further stated, "overall, GDP growth of 2.6% is projected for 2018. Inflation is expected to peak at 3.9% in 2018—as the impact of the value-added tax being introduced during the second half of 2018 would mostly be felt in that year—before easing to 2.2% in the medium term. The availability of significant external and fiscal buffers and the strong financial sector should enable the country to withstand downside risks, including lower-than-envisaged oil prices, tighter global conditions and an escalation of the diplomatic rift".