Qatar Economic Outlook Issue Number 13

Figure 1-6: Inflation rate for Qatar's main 
trading partners and economic zones (%) 
1.1
5.6
-0.2
3.2
3.0
2.5
3.2
17.0
2.0
2.9
2.2
4.3
2.8
2.3
5.5
2.2
3.0
11.7
4.3
-10
0
10
20
30
40
50
China
India
Japan
Kuwait
Oman
Qatar
Saudi Arabia
Turkey
UAE
Germany
UK
USA
Advanced
Emerging Asia
Emerging economies
Euro area
G7 countries
Middle East & CA
World
2019
2020
2021 -estimate
Source: IMF - World Economic Outlook data, Oct. 2021

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Part 1: Economic Outlook 2021 - 2023 
31 
particular the US Federal Reserve, the 
European Central Bank, and the Bank of 
England, maintained that the phenomenon 
of price increases is temporary and is mainly 
caused by: (1) unemployment problems, (2) 
changing 
qualifications 
of 
potential 
employees and unwillingness to return to 
their previous low-paid jobs
15
, or pressure on 
parents to take care of children at home 
instead of in nurseries and schools
16
, (3) 
disruption of marine and land supply chains, 
(4) increased aggregate demand. This 
opinion was also echoed by the International 
Monetary Fund in its recent WEO report for 
the month of October 2021.
However, the rise in the inflation rate for all 
countries during the month of October 2021, 
including the United States of America by 
6.2%, made monetary policy officials in 
developed countries think seriously about 
how to tighten economic policies. For 
instance, Secretary of the Treasury Janet 
Yellen, in an online Reuter’s webinar on 2 
December 2021, noted that the word 
“temporary” should perhaps no longer be 
applied. In other words, inflation has become 
a non-temporary phenomenon. 
Therefore, economists and policymakers are 
discussing what is the appropriate approach 
and when to apply it, given that the speed of 
returning to the practice of traditional 
monetary policies is fraught with many risks, 
as it requires preparing the markets, 
especially the labor and financial markets, 
gradually and according to the circumstances 
of each country, because every economy has 
different sources of inflation; for example, the 
United Kingdom’s inflationary pressures are 
driven, among other factors, by the 
consequences of Brexit creating a shortage 
of critical workers (including truck drivers), as 
well as increased customs bottlenecks, 
15
https://www.washingtonpost.com/business/2021/12/08/october-
employees-quitting-jolts/
requiring high costs and bureaucratic delays 
to resolve, while the European Union is least 
affected by the consequences of inflation, 
since the influence of Germany as the largest 
economy in Europe on eurozone inflation is 
minimal, thus inflation in the eurozone 
remains limited, as Figure 1-6 indicates. 
However, no nation, or group of nations, can 
thrive in isolation, and therefore it may 
become the case that the European Union 
will have to closely coordinate its monetary 
policy with the expert opinions of the 
International Monetary Fund, as well as the 
economic policies of the United States of 
America, which is in a difficult position having 
to choose in trading off between growth and 
inflation.
From the minutes of the Federal Open 
Market Committee (Federal Reserve) 
meeting held November 2-3, 2021, published 
on November 24, 2021, followed by the press 
release of December’s 2021 meeting, it is 
likely that the United States will begin to 
move gradually towards a tighter monetary 
policy while being careful to ensure that the 
financial market is not affected, because a 
rapid move towards a conventional monetary 
policy can cause significant damage to 
financial markets, in particular, any abrupt 
halt to the quantitative easing policy will 
probably affect the prices of bonds and 
stocks. 
Therefore, the committee decided to seek to 
implement a monetary policy to maintain the 
inflation rate at 2%, and to maintain interest 
rate stability during the next six months at a 
rate ranging between (0 - 0.25%). The 
Committee also agreed to quickly reduce 
purchases of quantitative easing, starting 
respectively in November and December 
2021, by reducing $15 billion and $30 billion 
16
https://www.nytimes.com/2021/10/30/business/paid-family-leave-
working-parents.html

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