Economy and Finance Minister: Qatar's Economy Expected to Grow by 5.4 Percent this Year

Doha, December 11 (QNA) - HE the Minister of Economy and Finance Youssuf Hussain Kamal has expected the economy of Qatar to achieve a growth of 5.4 percent this year, pointing out that economic growth prospects over the next few years will be around 5 percent annually. Addressing the opening session of the Euromoney Qatar Conference, which opened here today, HE the Minister of Economy and Finance said the state's efforts to achieve the optimum utilization of energy sources and the diversification of economic activity helped Qatar's economy achieve record growth rates over the past years with the average compound annual growth rate of the Gross Domestic Product (GDP) at constant prices reaching 14.8 percent in 2011. He pointed out that Qatar has developed a fundamental objective in Qatar National Vision 2030 which is to achieve financial stability through sound fiscal policies and a risk-free effective financial system, noting that the vision's interest in financial stability comes in the quest of the State to achieve economic diversification and to strengthen the capacity of the national economy to absorb global economy shocks which require a powerful financial system able to support various economic sectors at all times. The economic diversification strategy includes giant projects for the establishment of an advanced infrastructure to serve different economic sectors, which need a powerful financial system able to provide funding for these projects, which many of them are currently under way, the Minister of Economy and Finance said adding that due to this strategy the Qatari banking sector managed to achieve sustained growth over the past years. He said the conference comes at a very important time as the global economy is facing more pressure since the beginning of this year as a result of the sovereign debt crisis in the euro zone and the Arab Spring countries, which have recently seen political changes and are currently suffering from the economic consequences of these changes. Minister Kamal added that GCC states are enjoying high growth rates and optimistic prospects with regard to the future economic performance, thanks to high energy prices, continued focus on development projects and expansion of the private sector participation in economic activities, explaining that the International Monetary Fund (IMF) estimated the high rate of growth in GDP at constant prices in the region to 5.6 percent in 2012, which represents a high growth rate compared with the other regions of the world. HE the Minister of Economy and Finance Yousef Hussain Kamal added in his speech at the EuroMoney Qatar conference the global financial crisis broke out five years ago but its repercussions have not receded so far. He noted that while the measures being taken by world countries reflect the importance of coordinated efforts, they also confirm that the effects of the crisis remain heavily pressing on the global economy. He stressed that the continuation of the crisis to a relatively long period had adverse affects on the different economic and social sectors in the world, resulting in high levels of unemployment and the lack of new job opportunities, pointing out that the current situation makes the global financial sector a source of concern and tension rather than a key player in financing the various economic sectors to achieve sustainable development. HE the Minister of Economy and Finance also noted that the global financial system is facing rapid changes and developments that challenge the banking sector, adding structural change in the global financial system is the biggest challenge. The International Monetary Fund (IMF) believes that complex financial products and high-risk derivatives are starting to take a variety of forms to get around new legislations, which leads to bigger non-banking financial sector, he said. He added that the non-banking financial sector's lack of regulatory legislations and mechanisms could lead to increased structural risk in the global financial system. HE the Minister explained that the second challenge facing the banking sector around the world is the new competition for its role in employing deposits, with a significant part of senior bank customers, whether institutions or individuals, opting to invest their money directly in the debt markets or in companies that need loans instead of doing these transactions through banks, which turns traditional bank customers to competitors in the future. He pointed out that this shift began to lead to a deregulated market of financial services, which can severely affect the banking sector and result in a lack of control over their risk levels. HE Yousef Hussain Kamal said that the third challenge to the banking system is the widespread information and comunication technology, especially with the emergence of huge technological institutions and giant social networking sites, which started to provide innovative financial services, adding that despite the limited amount of electronic transactions outside the global banking system, the ability of technological institutions to attract hundreds of millions of subscribers amid steady rise in the volume of electronic commerce will lead to significant shifts in the nature of financial services in the future. (END)