Qatar banks’ credit grew by 3.2 percent as at the end December 2018. Public sector’s credit requirement was reduced by 6.7 percent in 2018, compared to the previous year. In contrast, private sector triumphed well recording a significant growth of 13 percent. The year witnessed a significant 34.6 percent jump in demand from private sector in foreign currency credit, Qatar Central bank (QCB) data showed.
Initiates taken by government to push the private sector including the Public Private Partnership (PPP) policy, drive on the SME sector development, policies targeted towards attaining self-sufficiency, etc are the possible reasons cited for the momentum for overall private sector credit growth.
Government, which holds a considerable share (19.3 percent) of bank credit in 2017, reduced its domestic borrowing in 2018 by around 13.5 percent. This considerable reduction in credit off take contributed to the decline public sector credit demand. Banking sector has continued to reduce its exposure to the non-residents. According to credit extended to non-residents decline by around 11 percent in 2018.
The QDB data showed demand for foreign currency credit moderated since September 2017 and it continued until the last quarter of 2018. In Q4, foreign currency credit started an uptrend contributed by both public sector entities and private sector. The demand for foreign currency credit from private sector was more pronounce from the second quarter of 2018 onwards.
Higher demand in foreign currency credit towards the end of the year resulted in a year-end growth of 8.4 percent. Public sector credit in foreign currency increased by 5.7 percent while demand for foreign currency from private sector increased exponentially by around 34.6 percent.
On the other hand, demand for local currency from public sector ebbed after the first quarter of 2018. At the same time, local currency credit demand from private sector has shown a liner uptrend in 2018. Consequently, public sector credit in local currency declined by around 13 percent and private sector credit in local currency increased by 9 percent by the end of December 2018. Credit demand in foreign currency provided a major push for the growth in overall credit.
Among public sector, only the credit demand from government institutions recorded positive growth, while demand from semi government institutions and Sovereign declined considerably. Within private sector, credit demand from ‘General Trade” and “Services” sector grew significantly high. At the same time, credit demand from “Contractors” weakened.
Government push in the development of SME sector is expected to have resulted in higher growth in credit to both “General Trade” and “Services” sector. The economic diversification drive which resulted in progress in service sector, including hospitality, education, medical services etc, might have contributed to the higher growth in services sector credit.
Credit demand from real estate sector was lackluster. Subdued growth in real estate prices as well as decline in rental prices in the last couple of years might have contributed to the lower growth in credit demand.
Demand for credit for real state sector grew in first quarter of 2018 and remained more or less stable in absolute values in the remaining part of the year. Credit demand from consumption improved marginally though it was at subdued level as compared to the overall growth in private sector.
