Qatar National Bank (QNB)

Qatar’s economic growth will reach 7.8% in 2016 up from 6.8% in 2014, QNB’s report said.
The report said that hydrocarbon production will grow moderately while the non-hydrocarbon sector will expand at a double-digit pace on higher investment spending and a growing population.
In its latest issue of Qatar Economic Insight, QNB said Qatar’s economy has started a new diversification phase as large investment spending in the non-hydrocarbon sector accelerated growth to 6.5% in 2013 (6.1% in 2012) while growth in the hydrocarbon sector slowed.
The share of the non-hydrocarbon sector in GDP is projected to grow from 49% in 2014 to 57.2% by 2016. Inflation has slowed since mid-2013 (CPI inflation averaged 2.8% in H1, 2014) as rising rents were offset by lower global food prices. overall inflation is projected to increase moderately to 3.4% in 2014 and 3.5% in 2015 as rising rents outweigh lower food prices.
The government has ramped up budgeted capital spending, driving overall investment and economic growth, while the fiscal surplus increased to 15.6% of GDP in the fiscal year that ended in March, the report said.
The government has recently earmarked $182 billion for project implementation over the next five years, of which $27.4 billion is in 2014/15.
Banking asset growth slowed to 9.4% in the 12 months to end-June 2014 on lower public sector borrowing; non-performing loans (NPLs) were low at 1.9% of gross loans at end-2013 and banks remained well capitalized, with the average capital adequacy ratio well above the QCB requirement under Basel III.
Bank lending is expected to rise by an average 10.7% in 2014-16, increasingly driven by the expanding population and steady deposit growth averaging 12.5%.
Low provisioning requirements and efficient cost bases will support continued strong bank profitability.