BY MOHAMMAD SHOEB
DOHA: Qatar’s inflation rate in 2014 is expected to touch 5.5 percent due to steady rise in housing rentals, according to the finding of a research conducted by Standard Chartered.
The inflation is anticipated to go up further in 2015 in the rage of between 6 percent and 6.5 percent due to additional inflationary pressure from the construction sector.
“Qatar and the UAE are witnessing some of the highest inflation rates across the GCC region. We believe this is largely driven due to tight housing market,” said Shady Shaher, Senior Economist (Mena region) at Standard Chartered bank.
Shaher, during a media briefing on the highlights of Global Research, said: “In the UAE rentals have increased nearly by 30 percent compared to last year. And in Qatar also we have started witnessing pressure on the housing market again largely driven by sharp growth in population.”
Providing estimates, he said that Qatar’s population in September 2014, compared to a year back, has increased by 7.8 percent, which has put a lot of pressure on the housing sector to push rentals very high.
“As the population rises, the demand for property picks up, and housing rent being a significant component of the Consumer Price Index, inflation is likely to increase further due to some additional factors such as rising pressure (prices) from the construction industry, including the surging prices of raw materials,” he said.
He reiterated that in the long-run one of the other risks for inflation will be the construction sector inflation largely due to the scale of the projects in the pipeline. “Logistical challenges to import raw materials, at a time when there is a strong demand for the construction materials in other parts of the GCC, coupled with the lack of the availability of needful workforce and talent, will further push the pressure to the sector,” said Shaher.
However, he said that the overall economic outlook of the region is expected to remain stable despite dwindling oil prices and slower economic recovery in the US and EU.
“The important point to keep in mind is that the GCC region has sufficient fiscal reserves amounting to about $2.1 trillion, which the central banks can easily draw to fill in gaps in the budget,” he said.
He also expressed his optimism that the oil prices will bounce back to $100 a barrel, but this may potentially take some time, may be by the first quarter of next year.
Providing a global economic outlook, Marios Maratheftis, Managing Director, Global Head of Macro Research at Standard Chartered, added: “Despite anemic growth of 2.2 percent in the US and dwindling recovery in the EU, the year 2014 will be better than 2013 as the emerging markets have become more resilient than they were a year ago. The current account deficits of these countries such as India, Indonesia and Turkey have narrowed down significantly which means these markets once again will be the driving force of global economic performance.” The Peninsula
