Qatar: Increased demand for credit facilities
Credit facilities contribute towards improved economic activity
According to a report by Kamco Research, there is increased demand for credit facilities in Qatar, which it has attributed to improved economic activity.
While the private sector accounts for the bulk of lending in Qatar, increased infrastructure investments has resulted in higher lending to the public sector.
The report said that Qatar is experiencing delays in project execution, which has resulted in cost escalation. However, it continued, “The Qatari government has recently accelerated work on infrastructure projects, which will have a similar effect on the pace of credit growth”.
Qatar’s broad measure of money supply (M2) increased for the third consecutive quarter, to add around QR734mn, to stand at QR484bn in the second quarter of 2014, it said.
The rise in M2 is mainly attributed to the increase in the demand deposit by 8.3% or QR8.99bn.
Also, the report said that GDP growth in the GCC region is expected to improve in 2014, continuing on from healthy growth in 2013.
Economic diversification initiatives in the region are spurring growth, and are starting to show results, along with the gradual economic recovery of GCC trading partners, the report said.
Inflation though, is not a major concern for the GCC market. The regulators are actively managing price levels with the help of policies targeting specific sectors.
While inflation is not considered a major concern for the GCC market, rates for the region ranged between 1.2% and 3% at the end of the second quarter of 2014, compared with the same period last year, the report said.
The highest inflation numbers recorded was in Kuwait at 3% followed by Qatar at 2.8%, while the inflation rate for the GCC's largest economy, Saudi Arabia, stood at 2.7%. The price rise is generally highest for the real estate, food and furniture.