Qatar Commercial Banking Report Q2 2010

Qatar Commercial Banking Report Q2 2010

Qatar’s economy has survived the global economic downturn relatively well and we believe that it will be one of the fastest growing economies in the world over the coming years. We forecast a strong real GDP growth of 15.8% for 2010 and an average growth of 8.4% over the forecast period 2010-2014. This growth is mostly due to expanding oil and (especially) gas output in the light of the recovery in the oil and gas markets over the course of 2009, as well as a high level of government spending. With a strong economy, many investment opportunities in the oil and non-oil sectors, and a stable political and security environment, Qatar is one of the most attractive foreign investment destinations in the Middle East. The government has taken measures to structurally improved the investment climate, including setting up the Qatar Financial Centre (QFC) to assist the establishment of foreign businesses. However, the residential property market has hit a slump. Until the global economic crisis took effect in H208, there had been a three-year boom, during which property prices and rents increased substantially. Since the global recession, demand has been falling as supply has increased, leading to a falls in prices and rents. House prices fell by up to 30% in H109. Also, the credit crunch has led to a decline in mortgage lending, especially to foreigners.

There is some expectation of a rise in housing prices this year, especially with rising oil and gas prices – although, there now are fewer expatriate home buyers in the market. In any case, Qatar will have to come to terms with changing market fundamentals in the residential sector, after years of significant housing shortages.

The office market has suffered from a large and growing supply of office space, together with a reduced demand due to the global economic downturn. Total office space more than doubled over 2008, and it is expected to rise by an even greater extent into 2010, according to Jones Lang LaSalle in May 2009. The high levels of new office space entering the market, together with dampened demand due to the global economic crisis, will keep pressure on rental rates. Office rents are not expected to increase until at least the end of 2010, due to the high levels of supply and low demand.

While there has been strong demand for retail space in recent years, supply has been expanding rapidly, which will lead to a fall in rentals in the short term. There is a move to develop more large-scale mall and leisure complexes. The affluence of the growing population and the push to make Qatar a major regional tourist destination will both serve to boost the retail market.

Table Of Contents:

Executive Summary

Key Features Of This Report

SWOT Analysis

Real Estate Market Overview

Industry Forecast Scenario

Qatar’s Real Estate Outlook

Qatar’s Monetary Policy Outlook

Qatar’s Macroeconomic Outlook

Business Environment

Qatar’s RECBER

Middle East Project Finance Ratings

Overview Of Middle East And Africa Business Environment

Company Monitor

BMI Methodology

Project Finance Ratings Indicators

Source

Question by Firozali A M: Why does Th Bank of Tanzania want deposits from the commercial banks. Is there a shortage of cash in the BOT?
Globalization has failed.
Sir
When I read the books on “The Death of Economics: Books: by Paul Ormerod … all the ego driven, engineering models, that bore people to death of economics. … Death of Economics , Shopped: The Shocking Power of British Supermarkets: by Joanna Blythman … ‘Shopped’ takes the reader on a lively, thought … Shopped, the super pier of the supermarkets , The World is Flat Thomas L. Friedman Chances are good that Bhavya in Bangalore will read your next x-ray, or as Thomas Friedman learned first hand, “Grandma Betty in The imaginative and, above all, practical vision for a successful and equitable world, Nobel Prize winner Joseph E. Stiglitz’s Making Globalization Work , I see all the controversies diluted .
Let me elaborate.
The authors have written these books having the rich countries in mind. They do understand that the poor countries do not count as the super power makes the coins roll. Hence they have always harped on the poor countries as the third grade states and never giving any remedies to these countries. The result is now in Tanzania where this letter comes from, The central, Bank Of Tanzania, wants to Commercial banks to deposits of one trillion into the BoT
In other term the central bank has no liquidity and begs the commercial bank. This is reported in the local papers CITIZEN ISSN 0856-9754 no 908
A local paper managed by the Nation Media of Kenya.

I thank you
Firozali A.Mulla MBA PhD
P.O.Box 6044
Dar-Es-salaam
Tanzania
East Africa

Best answer:

Answer by bs’n
Commercial banks are required to put a fraction of the deposits they collect with the country’s central bank (Bank of Tanzania). This is to ensure that the commercial banks do not lend all the moneys they collect as deposits and they are unable to meet the needs of withdral by deposits in times of their needs because the loans are yet to be repaid by the commercial banks. So, it has nothing to do with Bank of Tanzania running out of cash. There are other reasons.The reserve requirement (or required reserve ratio) is a bank regulation that sets the minimum reserves each bank must hold to customer deposits and notes. These reserves are designed to satisfy withdrawal demands, and would normally be in the form of fiat currency stored in a bank vault (vault cash), or with a central bank.

The reserve ratio is sometimes used as a tool in monetary policy, influencing the country’s economy, borrowing, and interest rates [2]. However, Central banks rarely alter the reserve requirements due to the fact that it would cause immediate liquidity problems for banks with low excess reserves. Instead, open market operations are used. As of 2006 the required reserve ratio in the United States was 10% on transaction deposits (component of money supply “M1″), and zero on time deposits and all other deposits.An institution that holds reserves in excess of the required amount is said to hold excess reserves.Reserve requirements affect the potential of the banking system to create transaction deposits. If the reserve requirement is 10%, for example, a bank that receives a $ 100 cash deposit can lend up to $ 90 of that deposit, keeping only a $ 10 cash deposit within the bank. If the borrower then writes a check to someone who deposited the $ 90, the bank receiving that deposit can lend out $ 81. As this fractional-reserve banking process continues, the banks can expand the initial deposit of $ 100 into a maximum of $ 1,000 of money ($ 100+$ 90+81+$ 72.90+…=$ 1,000). In contrast, with a 20% reserve requirement, the banking system would be able to expand the initial $ 100 deposit into a maximum of $ 500 ($ 100+$ 80+$ 64+$ 51.20+…=$ 500). Thus, higher reserve requirements should result in reduced creation of transaction deposits.Reserve requirements apply only to transaction accounts, which are components of M1, a narrowly defined measure of money. Deposits that are components of M2 and M3 (but not M1), such as savings accounts and time deposits such as CDs, have no reserve requirements and therefore can expand without regard to reserve levels. Furthermore, the Federal Reserve operates in a way that permits banks to acquire the reserves they need to meet their requirements from the money market, so long as they are willing to pay the prevailing price (the federal funds rate) for borrowed reserves. Consequently, reserve requirements currently play a relatively limited role in money creation in the United States
This has nothing to do with globalisation which ios not only desirable but inevitable. But if the country’s political leaders and economy managers are not competent and/ or corrupt, they may force the commercial banks to deposit monies to the central bank so that the Govt. can spend the money. This is like taking loans from the commercial banks by the Govt.

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