The most important Domestic Economic developments
First: Economic Growth and Gross Domestic Product
Qatari economy continued its good performance during year 2009 despite recession and stagnation that hit the majority of the economies in the world as a result of the international financial crises, which changed into economic crises that went amok, especially in the beginning of the year. According to the estimations of the International Monetary Fund, Qatari economy achieved growth rate of (9%) during that year the second highest growth rate across nations after China (9.3%). This achievement is attributed to the prudential mobilization of accumulated financial resources yielded by the sales of oil and gas which helped maintain and advance the economic growth and survive the reverberations of the international economic crises. According to the annual book of the Global Competitiveness for year 2009, which is published by the International Institute of Administrative Development Qatar ranked (14) among (57) countries in terms of economic competitiveness. It comes third in terms of surviving and bearing the international economic crises. The report identified the points of strength in the State of Qatar as the economic performance of the State and the Government efficient management which resulted in the increase of public revenues yielded from the projects of liquefied gas and petrochemical industries besides the increase of State's revenues from investing abroad in addition to Sovereign Bonds issued by the Government during the year the value of which reached approximately (10) billion dollars. All those factors gave the Government of Qatar a convenient position to pursue the implementation of development and economic diversification programs. The Government continued its financial policy that supports growth by means of developmental expenses although there was re-prioritization for a number of Government projects. The financial system in Qatar was only mildly affected by the international financial turbulences and the recent regional financial turbulences in Dubai. In facing those challenges the system was helped by the macro precautionary policy employed by Qatar Central Bank and the financial measures taken by the Government to support national banks by means of subscribing to their capital and purchasing some assets particularly from the real estate investment portfolios at those banks. Essentially though, the stock prices were adversely affected during the said year as a function of fear among investors to deal with stocks because of the international financial crises and in the last quarter of the year due to the reschedule of debts in Dubai. However the stock prices returned to score some mild increase at the end of the year.
It is expected that growth rate in Qatar in 2010 will increase by (16%) approximately according to the estimations of the International Monetary Fund. This may be attributed to the expansion and big increase in the production of liquidated natural gas (and related industries and also oil-related industries), the rebound of oil price, improvement in the transformational industries and building and construction, the surplus in public finance and foreign current account. However such expectations maybe affected by a slow in the recovery of global economy, the continuous retreat in real estate prices and the occurrence of unexpected adverse financial developments in the region. On the other hand expected increase in growth rate –if things go in this direction- may overheat the Qatari economy. To face this possibility the Government should re-prioritize public expenditure and the implementation of required infrastructure projects.
On the sectoral level the most recent published data for 2009 (till the end of third quarter) show that the contribution of the gas and oil industry to the GDP reached approximately (36.2) billion QR that is (48%) in comparison with (65.2) billion QR or (61.9%) at the end of the third quarter of 2008. The contribution of non-oil economic sectors to the GDP till the end of the third quarter of 2009 reached (39.3) billion QR or (52%) in comparison with (40.1) billion QR or (38.1%) at the end of the third quarter of 2008.
The Government services sector comes next to the gas and oil sector in terms of the contribution to the GDP at the end of the third quarter of 2009. The contribution of the Government sector in the said period reached approximately (10.6) billion QR or (14.1%) in comparison with (8) billion QR approx. or (7.6%) at the end of the third quarter of 2008. In the third rank comes the sector of money, insurance, real estate and business services which contributed approximately (10.1%) QR or approximately (13.4%) compared to (10.7) billion QR or (10.2) at the end of the third quarter of 2008. The building and construction sector comes fourth with a contribution of approximately (5.1) billion QR or (6.8%) at the end of the third quarter of 2008. The transformational industries sector ranked the fifth in terms of its contribution to the GDP at the end of the third quarter of 2009 which contribution reached approximately (4.8) billion QR or (6.4%) compared to approximately (8.4) billion QR or approximately (8%) at the end of the third quarter of 2008. As for the sector of trade, restaurants and hotels it came the sixth with approximately (3.4) billion QR or approximately (4.5%) compared to (3.5) billion QR or approximately (3.3%) at the end of the third quarter of 2008.
The Transportation sector ranked the seventh in terms of its contribution to the GDP at the end of the third quarter of 2009 which contribution reached approximately (3.3) billion QR or (4.3%) compared to approximately (3.9) billion QR or approximately (3.7%) at the end of the third quarter of 2008. As for the sector of electricity and water it came the eighth with approximately (1.9) billion QR or approximately (2.5%) compared to (1.4) billion QR or approximately (1.3%) at the end of the third quarter of 2008.
Lagging behind all sectors is the fishing and agricultural sector and some other services with negligible contribution.
Second: Inflation Rate
Due to acute drop in house rentals during 2009 – which is given the biggest weight in calculating the country's inflation index- the inflation rate went down considerably till it reached according to the estimations of the IMF (- 5.5%) during the year compared to (15%) in 2008 which was a record breaking figure and the highest inflation rate level ever reached in the country. IMF expects that the inflation rate may jump to (1%) in 2010 due to the increase in the prices of food and raw material in the global markets and due to the effect of planned investment in the infrastructure on local prices.
Third: General Budget of the State
The general budget of the State for the fiscal year 2009/2010 has been prepared under the effects of the global financial crises which changed into economic crises that spared no country in the world and led to a general drop in demand worldwide and in particular on crude oil which prices considerably dropped at the time of preparing the budget so much so that the price of oil was estimated at (40) USD per barrel. This led to modest estimations of budget revenues of which oil revenues form approximately (70%). Essentially though, the Government was keen on the budget maintaining the basic objectives on the human, social, economic and environmental development levels according to the "National Vision 2030" by allocating handsome amounts as expenses on public strategic and infrastructure projects.
The estimated public revenues for 2009/2010 reached (88.7) billion QR compared to (103.3) billion QR for the fiscal year 2008/2009. The estimated public expenditure for the fiscal year 2009/2010 reached (94.5) billion QR compared to (95.9) billion QR for the fiscal year 2008/2009. Thus it is expected that the budget of the fiscal year 2009/2010 faces a deficit estimated at (5.8) billion QR compared to a surplus of (7.4) billion QR in 2008/2009.
The allocations for main public projects in the budget of the fiscal year 2009/2010 reached (37.9) billion QR representing approximately (43%) of the total revenues expected in the budget compared to (40.5) billion QR representing approximately (39%) of the total revenues in the budget of the fiscal year 2008/2009.
The reverse trend from surplus (7.4) billion QR in the fiscal year of 2008/2009 to a deficit estimated at (5.8) billion QR representing approximately (6%) of the total expenditures in the budget of the fiscal year 2009/2010 is caused by estimating the budget revenues on basis of (40) USD the price of oil barrel as there was a global drop in oil prices at the time of preparing the budget in the first quarter of the year 2009 as a fallout of the global economic crises. However the oil price rebounded and reached in average (70) USD a barrel in August and between 75-80 USD per barrel at the end of the year. This suggests that there will be a surplus not deficit at the end of the year.
A glance at the allocations in the budget for expenditure on public strategic and infrastructure projects shows that those amounts are estimated at (37.9) billion QR and in absolute figures are less by approximately (2.6) billion QR than the (40.5) billion QR which were allocated for those projects in the budget of the fiscal year 2008/2009. However the inflation rate of (-5.5%) in the country in 2009 and the drop in the prices of raw materials particularly building materials during the year (some estimations put the drop at 40%) make the real value or the purchasing power of those allocations for public strategic and infrastructure projects in the budget of the fiscal year 2009/2010 more than those allocated for those projects in the budget of the fiscal year 2008/2009.
Fourth: The most significant monetary developments
The most recent reports issued by Qatar Central Bank show that at the end of November 2009 the most monetary developments at the banking apparatus in the country were as follows:
1- The cash supply increased in the narrow sense (circulating cash+ deposits under demand) to approximately (55.9) billion QR compared to (52.9) billion QR at the end of November 2008 with an increase of approximately (3) billion QR or (5.7%).
2- Cash supply in the broad sense (circulating cash+ deposits under demand+ Semi cash*) increased to approximately (211) billion QR compared to approximately (184.2) billion QR at the end of November 2008 with an increase of approximately (26.8) billion QR or (14.5%).
3- In the most broadest sense (circulating cash+ deposits under demand+ Semi cash + Government deposits) increased to (224.8) billion QR compared to approximately (206) billion QR at the end of November 2008 with an increase of approximately (18.8) billion QR or (9.1%).
4- The assets in foreign currency at the country's banking apparatus dropped to approximately equivalent to (45.3) billion QR compared to approximately (55) billion QR at the end of November 2008 with a decrease of approximately (9.7) billion QR or (17.6%).
5- The local net credit increased to approximately (231) billion QR compared to approximately (194.5) billion QR at the end of November 2008 with an increase of approximately (36.5) billion QR or approximately (18.8%).
6- The local net assets increased to approximately (165.6) billion QR compared to approximately (129.2) billion QR at the end of November 2008 with an increase of approximately (36.5) billion QR or approximately (28.2%).
7- The total deposits at commercial banks increased to approximately (218.2) billion QR compared to approximately (199.6) billion QR at the end of November 2008 with an increase of approximately (18.5) billion QR or approximately (9.3%).
8- Of the total deposits at commercial banks the deposits of the private sector (including semi Government organizations) valued approximately (157.8) billion QR compared to (125.9) billion QR at the end of November 2008 with an increase of approximately (31.9) QR or approximately (25.3%).
9- Special deposits in foreign currency dropped to approximately equivalent to (14.9) billion QR compared to approximately equivalent to (15.9) billion QR at the end of November 2008 with a decrease valued approximately one billion QR (6.4%).
10- The total local credit provided by commercial banks increased to approximately (244.8) billion QR compared to approximately (216.3) billion QR at the end of November 2008 with an increase of approximately (28.5) billion QR or approximately (13.2 %).
11- Of the total local credit provided by commercial banks the credit provided to the private sector valued approximately (176) billion QR compared to (158.7) billion QR at the end of November 2008 with an increase of approximately (17.3) QR or approximately (10.9%).
12- The foreign net assets at the country's commercial banks dropped to approximately equivalent to (-27.2) billion QR compared to approximately (17.7) billion QR at the end of November 2008 with a decrease of approximately (44.9) billion QR or approximately (253.6 %).
13- The total own resources of the country's commercial banks reached approximately (46) billion QR compared to approximately (55.5) billion QR at the end of November 2008 with an increase of approximately (8.5) billion QR or approximately (15.3 %).
14- The total property rights of the country's commercial banks increased to approximately equivalent to (52.8) billion QR compared to approximately (48.3) billion QR at the end of November 2008 with an increase of approximately (4.5) billion QR or approximately (9.4 %).
15- The average interest rate on inter-bank transactions was as follows: 2% for one day deposits; 2.03% for one week deposit; 2.08% for one month deposit; 2.43% for three months deposits; 1.97% for six months deposit; 3.47% for one year deposit compared to the following average interest at the end of November 2008: 1.57% for one day deposit; 1.79% for one week deposit; 1.95% for one month deposit; 2.69% for three months deposits; 3% for six months deposit and 3.88% for one year deposit.
16- The average interest rate on customers deposits in QR at the country's commercial banks was as follows; 1.87% for deposits under demand; 2.01% for saving deposits; 3.68% on one month deposit; 3.83% on three months deposits; 3.66% for six months deposits; 4.08% on one year deposit and 3.15% for deposits for more than one year compared to the following average interest rates at the end of November 2008: 1.89% for deposits under demand; 1.54% for saving deposits; 4.22% for one month deposits; 3.87% for three months deposit; 4.24% for six months deposits; 2.66% for one year deposits and 3.11% for more than one year deposits.
17- The average interest rate on credit facilities provided by the country's banks in QR was (8.64%) on debited current accounts; 9.92% on Bill Discounted; 7.61% on less than one year loans; 9.43% on loans for 1- less than 3 years; 9.08% on loans for three years or more; 8.45% on vehicle loans; 20.78% on credit cards compared to the following average interest rates at the end of November 2008: (8.67%) on debited current accounts; 8.06 % on Bill Discounted; 6.67 % on less than one year loans; 8.56 % on loans for 1- less than 3 years; 8.79 % on loans for three years or more; 9.09 % on vehicle loans; 20.76 % on credit cards.
18- The QCB declared interest rate on REPO was (5.55%); the interest rate on lending (5.5%) and (2%) for depositing compared to the following average interest rates at the end of November 2008: (5.55%) for REPRO; the interest rate on lending (5.5%) and (2%) for depositing. Expressed otherwise there was no change on interest rates in 2009 than at the end of November 2008.
Fifth: Qatar Stock Market
- Qatar Stock Market witnessed a quality development with the incorporation of "Qatar Bourse" Company which commenced its activities on 21st June 2009. The company which is a joint venture between Qatar Holding Company and NYSE EURONEXT aims at creating a global bourse with the State of Qatar its hub with a view to enhance liquidity and transparency, increase the investment instruments, broaden the participation basis in the market, observe the best international standards and use the ultra modern technology.
- The number of listed companies in the market at the end of 2009 was (44) compared to (40) at the end of 2008 with an increase of (4) companies. Of the listed companies at the market as of end 2009:
i. (9) companies are banks and financial corporations
ii. (5) companies working in the insurance field
iii. (7) companies working in the industrial field
iv. (23) service companies
- The market index closed in 2009 at (6959.17) points compared to (6886.12) points at the end of 2008. Thus the index re-achieved annual increase though a modest one (1.06%) after the remarkable drop of (39.1%) at the end of 2008 than in 2007.