The annual growth rate of bank credit to the private sector in Qatar has picked up strongly in 2011, according to a new report.
It has climbed steadily from 4.3 per cent in January to reach a peak of 18.8 per cent in August, where it has levelled off, QNB Capital said.
Total bank credit to the private sector reached QR221 billion ($60.7 billion) at the end of October, representing 61 per cent of total domestic credit. QNB Capital said the growth rate remains broadly in line with the average rate of 15 per cent in 2009-10. Credit growth provides an indication of activity in the economy. The recovery in private sector credit has been stronger in Qatar than in other GCC countries.
Private sector credit expanded by 9.8 per cent in Saudi Arabia and by 2.4 per cent in Kuwait in the year to October. While in the year to September, it grew by 9.2 per cent in Bahrain and by 8.9 per cent in Oman. Credit growth in the UAE was just 1.3 per cent in the year to June.
The real estate is the most important component of credit to the private sector. Its share has risen to 22 per cent of total domestic credit from 14 per cent in October 2010. The next largest sector is consumption, or retail lending, which grew at 12.7 per cent in the year to October, but its share of total credit fell from 19 per cent to 17 per cent over this period.
The services and industry sectors have also expanded at rates of 6.2 per cent and 2.8 per cent respectively in the year to October.
The largest component of total domestic credit is the public sector. Annual growth in Qatar’s public sector credit has been strong, averaging 45 per cent in 2006-10 and it was 16 per cent in the first 10 months of the year compared with the same period of 2010.
It has accelerated from a low in the middle of 2011 to reach 33 per cent in the year to October. The public sector now accounts for 39 per cent of total domestic credit compared with 36 per cent in October 2010.
QNB Capital expects credit growth to remain strong in 2012-13 as Qatar’s infrastructure development presses ahead and the non-oil sector expands its activities.