Qatar’s real gross domestic product (GDP) growth will average at 3.6% until 2019 but is constrained by “very high” inflation volatility, according to Moody’s, an international credit rating agency.
Highlighting that economic diversification continues, with the non-hydrocarbon sector growing a robust 7.7% in 2015; Moody’s said the sector has benefited from the country’s accelerated infrastructure investment in the runup to the 2022 FIFA World Cup and as part of Qatar National Vision 2030 development plan.
State-owned entities have driven this growth by undertaking capital investments for infrastructure projects such as a metro network, port and rail freight lines and a new airport, it added.
“However, Qatar’s overall real GDP will average at 3.6% until 2019, markedly lower than the average growth of around 6% between 2011 and 2015,” Moody’s said.
Real GDP grew at an average of 13.4% between 2006 and 2014, outpacing most rated sovereigns over that time, it said, adding the hydrocarbon sector accounted for 36% of GDP in 2015 (down from 51% in 2014) but contracted 0.1% year-on-year in real terms that year.
The country’s proven oil and gas reserves are the fifth largest in the world, at approximately 188bn barrels of oil-equivalent in 2014. 
Qatar is currently the world’s leading exporter of liquefied natural gas, accounting for one third of global exports.
Qatar’s economic strength is based on the country’s exceptionally high income with a GDP per capita (based on purchasing power parity) of $132,099 in 2015, the highest amongst Moody’s rating universe. It also has significant proven oil and gas reserves and benefits from strong economic growth.
The assessment also factored in the Qatari economy’s high degree of competitiveness. In the World Economic Forum Global Competitiveness Report 2015-16, Qatar ranked 14th out of 140 countries, the highest score among the Gulf Cooperation Council countries. Although Qatar’s institutional strength is rated as ‘high’, taking into account its strong institutional framework and effectiveness; Moody’s said governance, however, is constrained by “very high inflation volatility”, a proxy for policy credibility and effectiveness.
Measured by the standard deviation of average annual CPI (consumer price index) inflation in the 10-year period between 2005 and 2014, it has been one of the highest among the countries it rates, according to Moody’s.
“Nevertheless, inflation has been low and relatively stable since 2009,” it added.
Finding that the primary risk to the government’s finances relate to fluctuations in global hydrocarbon prices, it said this risk, however, is mitigated by the country’s sovereign wealth fund the Qatar Investment Authority’s large and presumably liquid assets at around 180% of the GDP at December 2015.