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Qatar’s current account balance recorded a surplus QR23.4bn in 2017, in contrast to a deficit of QR30.1bn in 2016. The recovery in global energy prices enabled the turnaround in the current account balance and restores back the surplus position that Qatar had maintained for nearly two decades prior to 2016. As a percentage of GDP, the surplus stood at 3.8 percent in 2017 as against a deficit of 5.4 percent in 2016, Qatar Central Bank disclosed yesterday.
Within the current account, the trade (goods) account surplus increased to QR133.7bn in 2017, a sharp increase of 44.8 percent from the surplus of QR92.4bn in 2016.
Deficit in the services account continued, but at QR49.9bn showed a significant decline of 16.2 percent from the deficit of QR59.6bn in 2016. Deficit in the income account also recorded a sharp fall, while deficit in the transfers account remained flat at QR58.8bn in 2017 compared to QR58.9bn in the previous year.
Increase in trade surplus is followed from a combination of sharp rise in exports and contraction in imports. While exports grew by 17.8 percent to QR245.7bn, driven by hydrocarbon exports, imports declined by 3.7 percent to QR112bn on an annual basis.
With the sustained recovery in energy prices, the share of energy related exports in total exports increased to 84.2 percent during 2017 from 81.6 percent during the previous year. Because of this surge in hydrocarbon exports, total exports as percentage of GDP increased to 40.3 percent during 2017 from 37.6 percent. On the other hand, the overall deficit under non-merchandise heads in 2017 declined by 9.9 percent to QR110.3bn from QR122.5bn.
Explaining on capital and financial account balance during the year 2017, the QCB document noted under the ‘portfolio investment’ Qatar saw a net capital inflow of QR33.5bn during 2017, increasing from QR22.1bn during 2016. However, the pattern was completely different from the previous year. During 2016, net inflows from foreigners’ portfolio investment in Qatar exceeded residents’ portfolio investment outflows abroad. By contrast, during 2017, the net inflows were due to residents’ higher unwinding of portfolio investments abroad than foreigners’ unwinding of portfolio investment in Qatar.
As residents unwound their portfolio investments abroad during the second and third quarter, there were inflows to the tune of QR41.6bn, while foreigners unwound QR8.1bn of their portfolio investments in Qatar.
On the assets side of the central bank, the QCB noted its total assets increased to QR188.4bn from QR181.5bn. The year witnessed significant shifts in the composition. Investment in foreign securities declined to 80.4 percent to QR14.2bn as QCB met all the increased demand for foreign exchange in the economy. There was also decline in QCB’s balances with foreign banks. The decline was to the tune of 9.9 percent to QR33.8bn at the end of 2017 from QR37.5bn at the end of 2016.
By contrast, the domestic assets in the form of balances with local banks increased substantially because of domestic liquidity support provided by QCB. These balances grew by 147.9 percent to QR110.5bn at the end of 2017 from QR44.6bn at the end of 2016, and constituted the largest component of QCB’s assets. Other domestic assets increased by 10.6 percent to QR23.7bn during the corresponding period and formed the third largest component of QCB’s assets. Despite the decline in the QCB’s external reserves during the second half of 2017, which was reflected in the decline in the QCB’s international reserves, the adequacy indicators of these reserves were still strong and very comfortable, where the reserve coverage ratio at the end of 2017 was standing at 320 percent.
The legal ratio stipulated by the QCB Law is only 100 percent.
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