Strong domestic demand from investments and private consumption drove double-digit non-hydrocarbon growth (11.5 percent) in Q1, 2014. The share of investment in GDP rose to 28.2 percent, compared with 26.8 percent a year earlier, QNB Group’s ‘Qatar monthly monitor’ noted yesterday.
Citing the Ministry of Development Planning and Statistics (MDPS) report, QNB analysts said the growth is driven by the implementation of major projects in preparation for the FIFA 2022 World Cup.
The share of private consumption to GDP rose to 13.8 percent in Q1, 14, compared to 13.2 percent a year earlier. The share of private consumption remains low by international standards, but is expected to rise over the medium term. Qatar’s overall CPI inflation fell to 2.8 percent, partially due to falling international food prices. Foreign inflation contributed 0.4 percent to overall inflation in June 2014. The contribution of domestic inflation fell to 2.4 percent notwithstanding rising rent, fuel and energy inflation (7.4 percent).
“We expect further growth in population to drive domestic inflation, leading to a modest rise in overall inflation to 3.4 percent for 2014 as a whole. However, there is a small risk that the fast-growing economy could lead to supply bottlenecks owing to limited domestic logistics capacity, pushing up inflation more than expected,” QNB analysts stated.
The foreign merchandise trade balance registered a surplus of QR32.3bn in June 2014. The surplus fell 1.3 percent year-on-year due to a large increase in imports (23.3 percent), reflecting strong domestic demand. Meanwhile, merchandise exports grew by 3.3 percent on high gas and oil prices.
Total exports in June stood at QR41.5bn and imports at QR9.2bn. Japan topped the export destinations in June accounting for 26 percent of Qatar’s exports, followed by South Korea (18 percent) and India (11 percent). The UAE was the largest exporter to Qatar in June (13 percent), closely followed by China (11 percent) and the USA (10 percent).
Qatar’s International reserves rose $0.7bn in June 2014 to reach $42.2bn, reflecting the large current account surplus. The import cover stood at 7.9 months at end-June, well above the IMF-recommended level of 3 months for pegged exchange rates.
Qatar’s international reserves have been steadily rising over the years on large current account surpluses. Going forward, QNB Group expects international reserves to continue rising.