Qatar Reports 41.8 Percent Growth
After Qatar posted the highest growth in the world last year, it is on the verge of reporting the leading growth for 2011 as well. Some are expressing concerns about this rapid growth, claiming it could result in overheating. Doha is carefully watching the economies of Qatar’s largest trading partners, according to reports from the Global Arab Network.
On a year-on-year basis the economy of Qatar expanded by a massive 41.8% during Q2 of 2011, as nominal GDP rose to $42.2 billion during the second quarter of this year, up from $29.7 billion during Q2 last year. The Qatar Statistics Authority reported this data back in October, revealing the astounding growth that follows an 8.8 percent increase during the first quarter of 2011.
The QSA stated that larger quantities of petroleum products and rising energy prices have driven the surging GDP. Liquefied natural gas contributed a large portion of the growth, with condensates and various natural gas liquids reporting major increases as a result of two new operations moving into full capacity.
Although this surging expansion is not expected to continue at the same rate through the third and fourth quarter, Qatar is still expected to record the fastest growth on the globe.
IMF predictions from September stated that Qatar will experience 18.7 percent growth this year, followed by 6 percent growth in 2012, resulting from several state investment programs reaching the completion stages.
The government will increase cash reserves as a result of this growth, and this year’s current budget surplus is estimated at $8.5 billion or 4.9 percent of the GDP for the 2011-2012 fiscal year, according to QNB Capital.
Rising outlays will reduce the surplus the following year, but the nation’s GDP is projected to experience 10 percent growth in 2012 and the budget will continue in the black. A QNB study stated that Qatar’s national economy would be $173 billion in 2011 and increase to $197 billion next year.
The threat of inflation looms over the growing nation, with the consumer price index reaching a 24-month high in August. If consumer demand continues to increase, inflation will continue to rise.
Salaries to public servants have recently been raised by 60 percent and military personnel have seen a 120 percent increase. These wage raises could prime inflation rates, although the QCB has committed to working at the situation, reducing any excess liquidity.
An IMF official warned that economic downturns in other areas of the world could have negative effects on the Qatari economy, as the nation relies on demand for oil and gas to fuel growth.
IMF director for Middle East and Central Asian regions, Masoud Ahmad stated that even the deep reserves that many GCC member nations have are not enough to negate the risks.
Qatar holds a good position with financial reserves, although the nation may still need to put protective measures in place to buffer problems in international banking or sovereign debt, as well as weaker emerging markets.
Finance and Industry in Bahrain Continue to Expand
Despite economic disruptions and a tough economic outlook, the financial and industrial sectors of Bahrain continue to grow during the second quarter of 2011, as reported by the Bahrain Economic Quarterly.
When compared to the 2010 data, the Bahraini financial sector experienced 1.7 percent growth during Q2 2011.
Both financial institutions and insurance companies reported positive performance, with 4.3 percent growth and 3.9 percent growth respectively, countering the declines reported in the offshore sector.
Manufacturing was up 3 percent on the year by June, preceding various commitments from international firms set to begin operations in the Bahrain International Investment Park.
Business loans expanded by 3.4 percent from the first quarter to the second, with loans to the manufacturing sector expanding by 15 percent.
Various stimulus measures have been put in place by the government, including suspended labour fees, an action that has been extended to the end of 2011. Public workers have seen wage increases and the debt ceiling has been increased.
A sovereign sukuk stretching over seven years raised $750 million for the nation, highlighting the overall strength and stability of Bahrain. IMF expects that the Bahraini economy will see 1.5 percent growth this year and a further 3.6 percent growth next year.
Shaikh Mohammed bin Essa Al-Khalifa is encouraged by these numbers, identifying the opportunities in manufacturing and pushing for economic diversification in Bahrain. These figures also indicate positive results from the recent announcements and preclude an increase in foreign investments, according to Bahrain Economic Development Board’s chief executive.
The financial industry continues to hold a major role in the Bahraini economy, driving growth and providing thousands of jobs. Increases in the number of business loans indicates that this important sector continues to fuel growth and GDP expansion.
The Central Bank of Bahrain issued a recent statistic stating that there are now 408 banks in Bahrain, up from 401 last year.
The growth resulting from stimulus spending, especially within the communication and transportation sectors, was cited with the Bahrain Economic Quarterly as well.
Reportedly the hospitality, real estate and construction sectors absorbed most of the adverse effects of the worldwide economic downturn and regional unrest.
The Economic Development Board issues the Economic Quarterly report in order to be transparent, working toward creating a more attractive climate of investment for foreign firms.
The nation’s Economic Strategy and Vision 2030 is a responsibility of the Economic Development Board and used to fuel growth in the private sector. This growth will further diversify the nation’s economy and improve living standards by providing more opportunities for Bahrainis.Paul Holdsworth, Staff Writer, Gulf Jobs Market News