Doha, Qatar: Several industries in Qatar have had stronger labour market dynamics post-Covid and will persist, said Fitch Solutions in its recent report adding that these are driven by swift economic recoveries locally and globally.
“Governments have been supportive of local labour markets, resulting in a tightening that has pushed up nominal wages. While inflation is eroding real gains in incomes, the strong labour market was a major driver behind the growth in consumer spending in 2022 and was protective from the full force of heightened inflation in 2023,” Fitch stated.
However, as major markets and economies slow over the second half of 2023 until the next year, Fitch Solutions anticipates some “upticks” in unemployment rates across the board.
The report notes that lower levels of personal savings, previously functioning as an option to support current consumption patterns, will mean households will have to reorient their purchasing patterns and cut back on their spending.
The data indicates that Qatar, forecast for unemployment (as a percentage of the total labour force) will average 0.30 percent this year, a slight decrease from the 0.32 percent average in 2022.
The tight labour market is expected to support the wage and employment prospects of Qatari consumers in the years
ahead.
Fitch highlighted that the authorities last month initiated measures to curb the rising inflation including a food security programme in which the government regulates the prices of essential food commodities in addition to the medium fiscal policies that control government spending.
Wider economic challenges facing families and buyers will continue to stem from the reopening of economies post-Covid, the report outlines.
Inflationary pressures are driven by demand-pull and cost-push inflation.
It further said, “In an attempt to rein in inflation, central banks have hiked their policy rates at some of the quickest rates historically, making the debt issued during the historically low-interest rate period of 2015-2019 less valuable.”
“Combined with the tightening of quantitative easing, financial institutions face liquidity issues and severe interest rate risks. While this is a relatively new issue, ongoing factors, such as labour market dynamics and the Russia-Ukraine conflict, continue to place downward pressure on our consumer outlook,” the report added.
However, the economic trajectory of various markets’ post-Covid recovery underlines the risk of rising unemployment and its impact on Fitch Solution’s consumer outlook in the short term.
