JEDDAH, 10 January 2006 — Qatar has enjoyed a growing trade surplus for the last several years with the main revenues for the country coming from exports of oil and gas. Buoyant oil prices helped increase exports in 2004 by a robust 39.6 percent to 68 billion Qatari riyals — about 65.7 percent of the country’s gross domestic product (GDP) for the year. Its import bill increased by 24.1 percent in 2004 to QR19.7 billion, leaving the merchandise trade surplus at QR48.3 billion, which registered a staggering growth of 47 percent over the preceding year.
According to a report by the Kuwait-based Global Investment House (Global), the exports data for the year 2004 suggest that oil, gas & related products accounted for around 83.7 percent of the total exports compared to 81.9 percent in 2003.
The top export trade partners for Qatar in 2004 were Japan, South Korea, Singapore, India, and Spain. Japan alone accounted for around 41 percent of the total export revenues of the country.
The main import items of Qatar consist largely of vehicles, aircraft and other forms of mechanized transport, machinery, tools, electrical equipment, spare parts and electrical appliances. Over the last five years, Qatar’s imports have witnessed significant jumps, increasing from QR10.7 billion in 2000 to QR19.7 billion in 2004, a CAGR of 17 percent.
In 2004, France displaced US and emerged as the top exporter to Qatar, alone accounting for 27 percent of imports. This was mainly because of the purchase of a number of Airbus aircraft for Qatar Airways. The top import trade partners for Qatar included France, US, Saudi Arabia, UAE and Germany.
Among the other components of current account, the year 2004 witnessed an increase of 2 percent in its net outflow on account of services at QR4.47 billion and income outflow witnessed dramatic rise at QR8.2 billion from QR1.5 billion in 2003. Outflow on account of transfers also witnessed significant jump of 36.6 percent to QR8.2 billion from QR6 billion in 2003 because of the increased remittances by the expatriate workers. In 2004, after taking into consideration all these outflows, the current account surplus saw a growth of 31.2 percent to QR27.5 billion as compared to QR20.9 billion in 2003. Capital & financial accounts deficit witnessed significant growth of about 138 percent to QR13.2 billion in 2004 from QR5.5 billion in 2003. This resulted in a decline of 7.2 percent in its balance of payments surplus which stood at QR14.3 billion in 2004.
The Global report said Qatar would continue to record strong trade surplus in 2005 and also in 2006 as volumes of LNG and oil export are likely to increase due to the expected increase in production.
The Qatar Central Bank’s (QCB) monetary policy will remain focused on maintaining long term peg between the Qatari riyal and the US dollar at QR3.64: $1. Keeping in line with this, the QCB will continue to adjust its discount rate in line with the US Federal Reserve rates. Therefore, the QCB has been regularly adjusting its rates depending on the moves by the Fed. In November 2005, the QCB raised its interest rates. QCB rate on loans increased from 4.20 percent to 4.25 percent and on deposits from 4 percent to 4.15 percent. However, it kept the repo rate unchanged at 4.85 percent. Going forward, further increases in the US Fed rates are likely and therefore the rates in Qatar are likely to go up.
In 2004, M1 (narrow money supply) grew by 29 percent to QR14.6 billion which was backed by 21 percent growth in currency in circulation to QR2.6 billion and 31 percent growth registered in demand deposits to QR12 billion. Over the five year period, 2000-2004, M1 has grown at a faster CAGR of 31 percent while M2 (broad money supply) has grown at a CAGR of 12 percent. At the end of 2004, M2 was at QR44.9 billion, recorded a yearly growth of 20 percent. In the broad money supply time deposits registered a growth of 15 percent to QR20.6 billion from QR17.9 billion in 2003.
Deposits in foreign currencies grew by 21 percent in 2004 to QR9.6 billion. The Quasi money grew to QR30.3 billion in 2004 from QR25.9 billion in 2003, registering a growth of 17 percent. During the first nine months of 2005, M1 witnessed significant jump of 28.5 percent over 2004 yearend level to reach QR18.8 billion. This growth was chiefly backed by an increase of 32 percent in demand deposits which stood at QR15.8 billion. M2 grew by 27 percent in 9 months of 2005 over 2004 yearend level and stood at QR56.97 billion.
