Qatar: According to the Economist Intelligence Unit, EIU, high energy prices will enable Qatar to maintain its strong trade position in 2023-24. This will keep the country’s external liquidity comfortable.
The strength of the nation’s credit resides in its significant fiscal and current-account surpluses, which are projected to restrict borrowing, in addition to its considerable external assets. EIU has assigned Qatar an ‘A’ sovereign risk rating, as its public debt has significantly decreased over the past two years.
The authorities are taking measures to reduce reliance on short-term non-resident deposits and external funding despite the sizeable “negative” net foreign asset position of Qatar’s banks. Additionally, higher interest rates and an expanded net interest margin have bolstered bank profitability, resulting in the EIU assigning a ‘BBB’ risk rating to the banking sector.
EIU has also assigned a ‘BBB’ rating to currency risk. This is underpinned by robust international demand for Qatar’s hydrocarbon exports which bring in a major current-account surplus as well as are at an appropriate monetary policy stance. Moreover, the stability of the riyal’s peg to the dollar is upheld by strong foreign reserves and the substantial assets held by the Qatar Investment Authority, which are estimated to be worth $475 billion.
However, the EIU highlights that Qatar’s economic structure risk rating is ‘BB’, primarily due to its over-reliance on hydrocarbon exports, making it vulnerable to global energy price fluctuations.
Looking ahead, the EIU predicts stable real economic growth for most of the long-term forecast period (2022-2050). The country’s growth will be sustained by elevated global hydrocarbon prices and investments in the Qatar National Vision development plan until 2030, after which growth is expected to gradually decrease.
Furthermore, the government may approve additional gas export projects beyond the planned ones for the mid-2020s, potentially leading to bursts of high growth.