DOHA: Qatar’s economy has successfully weathered the Arab spat and the impact of the economic blockade as a result its strong macroeconomic fundamentals and huge foreign assets.

Despite the siege, the nominal gross domestic product (GDP) of Qatar is forecast to register a robust growth in the 2018, noted an economic update by the Institute of International Finance (IIF).

Qatar’s nominal GDP is forecast to touch $191bn (over QR695bn) in 2018 against $166bn (QR604.48bn) in 2017. The real GDP is expected to grow by 2 percent in 2018 against 1.9 percent in the previous year, according to the latest review by IIF, the Washington-based global association of financial institutions and trade groups.

The IIF’s report has also forecast a sharp rise in Qatar’s current account surplus, and a significant fall in its public debt (as percentage of GDP) in 2018. Qatar’s current account surplus (the difference between exports and imports of merchandise), is expected to see a double-digit growth of 10.3 percent of GDP in 2018 against 3.9 percent in 2017, which is evident about the robust growth in the country’s international trade. And Qatar’s public debt is forecast to decline to 72.8 percent of GDP in 2018 from 86.8 percent last year.

The GDP- public debt ratio is forecast to get further strengthened in 2019 at 71.8 percent (of GDP), to be one of the lowest in the world.

“The Qatari economy continues to adjust to the effects of sanctions by some Arab countries. Given the large public foreign assets, Qatar is (in) a strong position to meet domestic funding requirements,” noted the IIF report.

The IIF report also noted that economic growth is set to get accelerated driven by increase in government spending and energy production.

Qatar’s fiscal balance (surplus) is forecast to reach 3.4 percent of the GDP in 2018, which is also a remarkable development as an indicator of the performance of the Qatari economy. Qatar will see a fiscal surplus after registering a fiscal deficit of 4.7 percent and 2.2 percent of GDP in 2016 and 2017, respectively.

The non-hydrocarbon sector’s contribution to the GDP is forecast to grow by 3.3 percent in 2018 against 3.6 percent in 2017, and the hydrocarbon GDP is expected to surge by 0.7 percent.

Commenting on the monetary and fiscal policies of the GCC economies, including Qatar, the IIF report said that the impact of the tightening monetary policy by the central banks of the GGC countries will be offset by fiscal stimulus.

“Monetary policy remains focused on preserving the currency pegs to the dollar. Key policy rates have increased by 25 basis points in Saudi Arabia, the UAE, Qatar, and Bahrain following the recent hike in the US,” the report said.

“The Saudi Arabian Monetary Authority raised its repo and reverse repo rates to 2.5 percent and 2.0 percent, respectively. GCC policy rates will be raised further in the period ahead as US rates continue to rise. We expect another two rate hikes, each of 25 basis points, for the rest of this year and three hikes in 2019,” the report added.

“In general, short-term US and GCC interest rates move together, as the region’s currencies are pegged to the dollar, and the borrowing and deposit rates are usually higher in the GCC then those in the US. The growth will be picking up as the expansionary fiscal stance offsets the losses from monetary tightening. Real GDP growth in the GCC is expected improve to 2.2 percent in 2018 (from a contraction of 0.3 percent in 2017) and 2.7 percent in 2019, driven by a substantial increase in public spending and a gradual increase in oil production.”