Qatar’s trade surplus widens in August

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Qatar’s trade surplus rose to $2.4 billion  in August  from $1.8 billion in July, helped by improving oil prices, Gulf Times reported quoting QNB’s latest ‘Qatar monthly monitor’. The country’s exports were worth $5 billion and imports $2.6 billion in August.

Exports rose 11% month-on-month (m-o-m) while imports fell by 2.1% m-o-m in August, QNB said. Exports were helped by a stronger Brent crude price of $47.1 a barrel compared to $46.5/b the previous month. “We expect the merchandise trade surplus to rise further in the second half of 2016 as oil prices recover,” QNB said.

Qatar’s overall balance of payments (BoP) deficit narrowed further in the second quarter of this year (Q2, 2016) to $0.3 billion from a deficit of $0.7 billion in Q1, 2016. The improvement in the BoP was driven by stronger inflows on the capital account, which stood at $2.9 billion in Q2 compared to $2.4 billion in Q1 while the current account remained in deficit at $2.5 billion.

Brent crude oil prices

In 2016, QNB expects a current account surplus of 4.1% of GDP before improving to 6.6% in 2017 on the back of an oil price recovery.

Brent crude oil prices climbed by 4.9% in September to end the month at $49 a barrel on the back of ongoing tightening in oil markets. Qatar’s crude oil production was steady at 677,000 barrels per day (bpd) in July 2016, a marginal increase from 670,000 bpd in June.

We expect Brent crude oil prices to average $45 per barrel in 2016 and $55 in 2017 as the rebalancing of the oil market continues, with strong growth in demand and supply cuts among high-cost producers, particularly in the US and non-Opec countries,” QNB said.

According to QNB, Qatar’s international reserves dipped to $36.5 billion from $38 billion the previous month. Qatar has maintained an average of $36.5 billion in reserves in 2016 so far.

In terms of months of import cover, Qatar’s reserves cover 7.2 months, well over the IMF recommended minimum of three months for a fixed-exchange rate regime. Both international reserves and months of import cover have been steady during 2016, despite the weak macro environment, QNB said.

Interest rates

Interest rates increased last month, suggesting tighter liquidity, QNB said. Overnight interbank rates increased to 0.92% in August from 0.74% in July; the three-month interbank rate rose to 2.5% from 1.25% in August and the one-year interbank rate rose by 7 basis points to 1.8%.

Liquidity began to tighten in September 2015; conditions have eased recently but rates are not yet at their historical lows, QNB said. Bank deposits continue their steady climb in 2016, increasing by 5.8% y-o-y in August. Private sector deposits make up 53% of bank deposits, while the public sector and non-resident sector make up 26% and 21%.

Private sector deposits grew marginally by 1.2% y-o-y while public sector deposits contracted by 15.4% y-o-y, QNB said.

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