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International Monetary Fund. Middle East and Central Asia Dept.
Swift and decisive policy response to the Covid-19 pandemic has helped to mitigate the health and economic impact of the crisis. Fast vaccination rollout has also strengthened the economy’s resilience to new pandemic waves, paving the way for a speedy recovery. As the economy rebounds, a gradual exit from pandemic support measures is underway.
International Monetary Fund. Strategy, Policy, & Review Department
The IMF’s Vulnerability Exercise (VE) is a cross-country exercise that identifies country-specific near-term macroeconomic risks. As a key element of the Fund’s broader risk architecture, the VE is a bottom-up, multi-sectoral approach to risk assessments for all IMF member countries. The VE modeling toolkit is regularly updated in response to global economic developments and the latest modeling innovations. The new generation of VE models presented here leverages machine-learning algorithms. The models can better capture interactions between different parts of the economy and non-linear relationships that are not well measured in ”normal times.” The performance of machine-learning-based models is evaluated against more conventional models in a horse-race format. The paper also presents direct, transparent methods for communicating model results.
International Monetary Fund. Middle East and Central Asia Dept.
This 2019 Article IV Consultation discusses that stronger real gross domestic product (GDP) growth is envisaged in the near term, with a recovery in hydrocarbon output. Medium-term growth will be buoyed by increased gas production and non-hydrocarbon growth. Expenditure consolidation would help to sustain fiscal and external surpluses. Ample liquidity will enable credit growth to support non-hydrocarbon GDP. Trade and geopolitical tensions could undermine investor confidence and weaken fiscal and external positions. The policy priorities are fiscal consolidation, strengthened fiscal policy frameworks, enhanced resiliency of the financial sector, financial inclusion, and a diversified economy. The financial sector remains sound, underpinned by strong profitability and capital. Strengthening the regulatory and supervisory frameworks would help to bolster financial stability. Attention to women’s empowerment by introducing legislation emphasizing equality in remuneration and avoiding gender-based discrimination would support inclusive growth.
International Monetary Fund. Middle East and Central Asia Dept.
This Selected Issues paper focuses on policies to drive diversification for Qatar. Diversification is important for a large commodity exporter like Qatar: it helps manage temporary shocks and prepare for sweeping changes to the economic setting. Qatar’s large financial holdings can help diversify revenues. Both structural reforms to improve the business environment and sector-specific policies can support diversification of activity and exports. Sector-specific policies should build on existing economic strengths in areas with room for exports and innovation. Emphasis should be placed on developing expertise in specific clusters. Export markets and competition provide crucial mechanisms to ensure discipline. Further diversification is important to help Qatar manage temporary shocks and prepare for far-reaching shifts to the economic context. Well-targeted, structured, and sequenced policies to encourage specific sectors can also play a role in diversifying Qatar’s economy. Export markets and competition should be deliberately used to hold recipients of support accountable. Policies to encourage specific sectors have resulted in little more than inefficient import substitution in many countries. Avoiding this outcome requires discipline: support should be withdrawn in the absence of progress.
Mr. Armand P Fouejieu, Mr. Sergio L. Rodriguez, and Mr. Sohaib Shahid
This paper estimates fiscal multipliers for the Gulf Cooperation Council (GCC) countries. Using OLS panel fixed effects on a sample of six countries from 1990-2016, results indicate that GCC fiscal multipliers have declined in recent years which would make the on-going fiscal consolidation less costly than previously thought. Though both capital and current multipliers have declined in recent years, capital multipliers are larger than current multipliers, which implies that reducing (less productive) current spending will help limit the adverse impact of such measures on growth.
International Monetary Fund. Middle East and Central Asia Dept.
This 2018 Article IV Consultation highlights that Qatar’s growth performance remains resilient. The direct economic and financial impact of the diplomatic rift between Qatar and some countries in the region has been manageable. Nonhydrocarbon real GDP growth is estimated to have moderated to about 4 percent in 2017 owing to on-going fiscal consolidation and the effect of the diplomatic rift. Headline inflation remains subdued, primarily owing to lower rental prices. The near-term growth outlook is broadly positive. Overall, GDP growth of 2.6 percent is projected for 2018. Inflation is expected to peak at 3.9 percent in 2018 before easing to 2.2 percent in the medium term. The underlying fiscal position continues to improve.
International Monetary Fund
growth in expenditure, GCC governments have started to implement significant fiscal consolidation measures, but more needs to be done. Rapid population growth and booming oil revenues led to large increases in government spending in the GCC in the decade to 2014, which now stands high by international standards. This expenditure is dominated by compensation of employees and other current spending which are large in percent of GDP compared to Emerging Market (EM) countries and other oil exporters. This keeps overall spending above levels consistent with long-term fiscal sustainability and intergenerational equity. The international experience with large fiscal adjustments provides some key lessons for GCC countries. This experience suggests that growth outcomes improve when fiscal adjustments are sustained as part of credible multi-year fiscal plans, rely on expenditure more than revenue adjustment, and lead to improvements in expenditure composition (away from current outlays to more productive spending) and the structure of revenue (away from direct to indirect taxation). Successful fiscal adjustments also tend to be part of wider structural reforms that support growth.
International Monetary Fund. Middle East and Central Asia Dept.
This 2016 Article IV Consultation highlights the adverse impact of lower hydrocarbon prices on the macroeconomic performance of Qatar. Growth has slowed despite still-resilient nonhydrocarbon activity. Real GDP growth of 2.7 percent is estimated for 2016. Inflation remained low despite subsidy cuts, averaging about 2.7 percent in 2016. Growth is expected to slow in the medium term as public investment growth tapers off and hydrocarbon output continues to slow. Further subsidy cuts, a moderate recovery in global commodity prices, and the introduction of a value-added tax are expected to improve the fiscal and external balances gradually over the near to medium term.