*IMF highlights Qatar's lending to small and medium enterprises (SMEs) and direct support to domestic equity market
Anti-coronavirus liquidity support has amounted to $41bn in the GCC, about 2% of the region’s GDP, a report by International Monetary Fund (IMF) has shown.
Policy efforts have appropriately focused on mitigation and containment, and targeted support to hard-hit households, sectors, and businesses, IMF said in its recent ‘Regional economic outlook’.
Qatar's lending to small and medium enterprises (SMEs) and direct support to domestic equity market were highlighted in the IMF report.
All countries affected by the spread of the virus have introduced varying degrees of domestic and international travel restrictions and quarantines to mitigate the immediate spread of the virus.
In addition, most have introduced forms of virus containment strategies, including curfews; suspending religious gatherings; closures of schools, non-essential businesses, and public venues; and banning dining in restaurants. Some countries have increased expenditure on health facilities and equipment, the report noted.
Support to the private sector and households affected by the virus and containment measures are broadly reflected through means to temporarily ease cash constraints, including direct cash transfers, suspension of rent and utilities payments, and loan modifications.
In addition, IMF noted government guarantees have been deployed for small- and medium enterprises (SMEs), and salaries of quarantined or ill migrant workers maintained in Qatar.
Easier monetary policy, including interest rate cuts in Qatar and certain other GCC countries and lower reserve requirements (Algeria), and substantial liquidity support to banks, particularly those lending to SMEs and hard-hit sectors (including Qatar), have complemented fiscal-based measures. There has also been direct support to domestic equity markets in Qatar.
In GCC countries, growth is projected to contract by 2.7% in 2020. Non-oil activity is expected to be a major drag on the near-term outlook, contracting by 4.3% this year, a significant downward revision from the 2.3% growth projected in the ‘October 2019 Regional Economic Outlook’ for the Middle East and Central Asia.
The service, retail, hospitality and tourism sectors have been particularly hard-hit by the spread of Covid-19 and containment measures, raising challenges for those countries where these industries command a large share of output (including Qatar).
Manufacturing has also slowed, and investment plans have been delayed across most of the region. Oil GDP is also expected to slow in 2020, contracting in most GCC countries.
Overall, oil GDP is expected to contract by 0.3%, though overall oil production is set to fall further with the latest Opec+ agreement, underscoring downside risks to oil GDP growth.
Growth in non-GCC countries is also set to weaken, with both oil and non-oil GDP contracting markedly in 2020. Oil GDP is projected to contract by 5.9%, on lower production, and non-oil GDP by 6%, on the widespread effects of the substantial coronavirus outbreak and containment measures, IMF noted.