Qatar set to experience strong recovery in 2021 and 2022: IIF

Qatar is expected to experience a strong recovery in 2021 and 2022 and recent structural reforms should encourage foreign direct investment (FDI) in the non-energy sector, according to the Institute of International Finance (IIF).
“We expect a strong recovery in 2021 and 2022, supported by the strengthening of oil and gas prices, the revival of domestic demand driven by the progress made in immunization, and the end of the three-year blockade,” said said the American company. the economic think tank said in a report.
In February this year, Qatar Petroleum, now renamed QatarEnergy, announced its decision to invest in the $ 29 billion expansion of its north field.
“This will allow QP to expand its production capacity from 77 to 110 million tonnes of LNG (liquefied natural gas) per year by 2025,” he said, adding that the modest twin deficits of 2020 are would turn into large surpluses in 2021 and 2022.
The authorities have recently launched partnerships with the private sector for logistics zones and other infrastructure projects. The government has also eased restrictions on foreign investment and hopes to attract more tourists by relaxing visa regulations, according to the report.
“Changing the law to allow foreigners to buy real estate in Qatar and allow them to own businesses without a local partner will also encourage FDI in non-energy sectors,” the IIR said.
Regarding the outlook across the GCC region, the report says economic growth is expected to gradually recover to 2.1% in 2021 and 4.6% in 2022, supported by oil prices and production and higher gas levels, advances in immunization that restore national activity, and the implementation of deeper structural reforms.
“Despite rising commodity prices, inflationary pressures remain contained, aided by fixed exchange rates,” he said, adding that “the fixed exchange rate regime in GCC countries continues to provide a credible political anchor for prices and financial stability “.
Stressing that the dollar peg is supported by significant holdings of foreign currencies; He said empirical studies show that exchange rate fluctuations have a limited impact on short-term competitiveness, as most GCC exports are hydrocarbons and substitutability between imports and domestic products is limited.
Finding that adjustment continues to be primarily driven by fiscal policy in the GCC, the report states that labor market flexibility improves competitiveness without the need for monetary adjustment.
Continued modest fiscal consolidation combined with rising oil and gas prices would eliminate last year’s large budget deficit in 2021 and push it to a surplus of 1% of GDP in 2022, according to the report. .
“Balanced oil prices will continue to decline due to a further increase in non-oil revenues, resumption of oil production and modest cuts in government spending,” the report said.
The combined current account of oil exporters would grow from a deficit of $ 6 billion in 2020 to surpluses of $ 165 billion in 2021 and $ 138 billion in 2022 (6% of GDP or gross domestic product).
“GCC’s appetite for debt will remain high, driven by the financial and non-financial corporate sectors,” the IIR said.
Stressing that GCC banking systems remain strong, IIR said capital adequacy ratios exceed 16% in the region and NPLs to total loans remain close to 2% in Saudi Arabia, in Qatar and Kuwait, and between 4% and 8% in Bahrain, Oman and the United Arab Emirates.

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