Saturday, March 14, 2009

"Qatar in a league of its own"

According to Deutsche Bank at least. However, it adds that despite current account and fiscal surpluses, and the "whopping" 29% real economic growth forecast this year, the headline figures "mask weaknesses in the non oil economy".

Despite this rosy outlook on growth Qatar has not been
left unscathed from the global financial crisis. The
stockmarket has been one of the worst performing in the
region (and the world) so far this year and the government
has recently announced it will buy the investment
portfolios of banks listed on the DSM in an effort to stem
the decline in prices. This comes 3 months after the
government announced that it would start injecting capital
into the country’s main banks via the QIA. While Qatar has
been proactive on this front they are one of very few
central banks aroud the world that have not cut rates
since the financial crisis intensified through Q4 08. The
Qatar Central Bank’s (QCB) overnight lending facility has
been unchanged at 5.5% since 2006 and the overnight
deposit facility unchanged at 2% since May 2008. With
inflation remaining the highest in the region at 13.2% YoY
for Q4 08 real rates remain deeply in negative territory in
Qatar. It is also likely that inflation will come down more
slowly than in the rest of MENA given the bumper growth
rates projected.

The fact that Qatar feels the need for such extensive measures could also indicate that they expect trouble with the loan books down the line.

More generally, this is what Deutsche Bank has to say about the wider Middle East:

The countries expected to bounce back quickest from the current downturn
are those where real estate booms were more contained, exposure to foreign
bank financing is low and fiscal and monetary policy responses have been
appropriate. Egypt and Saudi Arabia top our list. We put UAE firmly at the

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