IMF: Qatar Only MENAP Economy to Show Fiscal Surplus in 2020-21

Amidst disruptions caused by pandemic Covid-19, Qatar will be the only economy in the Middle East and North Africa including Pakistan (MENAP) region to show fiscal surplus this year and in 2021, according to the International Monetary Fund (IMF).

Qatar is expected to show fiscal surplus of 5.2% this year, which is, however, forecast to decline to 1.4% of gross domestic product (GDP) in 2021. But in the case of the wider MENAP region, the fiscal balance is tilted towards deficit of 11.8% and 9.2% respectively, the IMF said in its projections.

Elsewhere in the region, Bahrain is expected to show fiscal deficit of 11.9% of GDP in 2021 (compared to a bigger deficit of 15.7% in 2020), Kuwait 14.1% (11.3%), Oman 14.8% (16.9%), Saudi Arabia 9% (12.6%) and the UAE 7.1% (11.1%).

Qatar’s consumer price index (CPI) inflation is also expected to be much lower compared to that in the MENAP as well as in many other countries in the GCC. Qatar’s CPI inflation is forecast at 2.4% in 2021 compared to -1.2% this year. In the broader MENAP, the figures are 8.4% and 7.8% respectively.

In comparison, Bahrain’s inflation has been estimated at 2.5% in 2021 (compared to 2.6% in 2020), Kuwait 2.3% (0.5%), Oman 3.4% (1%), Saudi Arabia 2% (0.9%) and the UAE 1.5% (-1%).
In the case of current account, Qatar is expected to show a deficit of 1.8% and 1.9% in 2021 and 2020 respectively compared to 4.5% and 5.8% in the wider MENAP region.

Elsewhere in the region, Bahrain is expected to show a deficit of 7.3% in 2021 (against 9.6% in 2020), Kuwait 7.8% (10.2%), Oman 11.1% (14.2%) and Saudi Arabia 3.4% (3.1%). In the case of the UAE, the current account is slated to see surplus of 4.1% and 1.5% respectively in 2021 and 2020.

The IMF data also highlighted that Qatar’s real GDP growth to be the highest within the region. Qatar’s expected to post a 5% growth next year is in contrast to an estimated 4.3% decline this year on account of pandemic Covid-19. Qatar’s forecasted real economic growth in 2021 is better than the 4.7% averaged for the MENAP region.

In comparison, Bahrain is expected to register 3% growth in 2021 (compared to -3.6% in 2020), Kuwait 3.4% (-1.1%), Oman 3% (-2.8%), Saudi Arabia 2.9% (-2.3%) and the UAE 3.3% (-3.5%).

The growth projection reflects the current projections of fading effects from the Covid-19 outbreak, gradual improvement in oil prices, and the benefits from sustained global policy easing. The IMF update said in the GCC countries, growth is projected to contract by 2.7% in 2020. Non-oil activity is expected to be a major drag on the near-term outlook, shrinking by 4.3% this year, a significant downward revision from the 2.3% growth projected in October.