Buoyed by “healthy” economic growth and “continued” fiscal support for infrastructure from the government, Qatar will remain an “outperformer”, both regionally and globally, Fitch Solutions has said in a report.
Qatar ranks very high in Fitch Solutions Infrastructure Risk/Reward Index, which according to the researcher, was due to “strong government support” for construction and packed project pipelines.
Positive growth outlook and sustained government fiscal support for infrastructure is keeping rewards scores elevated in markets in the MENA region, and among GCC countries in particular.
Fitch Solutions MENA Country Risk team has highlighted that economic growth will largely hold up across the region.
This is one of its key themes for 2019.
“This will create opportunities for investment and encourage government spending on infrastructure, supporting strong rewards scores across the region,” the report said.
Qatar and some other GCC countries including Oman are “pursuing more fiscally expansive and growth-supportive” policies in order to continue driving economic diversification and job creation.
This will include government investment in large-scale infrastructure projects such as the Oman’s $6 .4bn Liwa Plastics Industries Complex.
“We expect Qatar, Oman and others to continue leading the regional rankings on industry rewards, where all currently score above 75 out of 100.”
An “improving” security situation in regional conflict zones will also benefit infrastructure risk and reward scores for MENA countries, Fitch Solutions noted.
A reduction in violence in countries including Yemen, Libya, Iraq and Syria is another of Fitch Solutions 2019 key themes chosen by its MENA Country Risk Team, which it expects to benefit the construction industry and support an improvement in RRI scores in these countries and their neighbours.
While construction activity in Yemen will remain in contraction in 2019, Fitch Solutions is forecasting an acceleration in growth in Iraq and Libya as violence dies down and reconstruction efforts get underway.
“We expect a more gradual improvement in risks scores over the coming quarters as the security situation on the ground improves, with potential for significant increases over the long term on currently low scores of 1.9 out of 100 for Yemen, 5.3 for Libya and 15.6 for Iraq. Greater stability will also benefit the region more widely, with Jordan in particular likely to see a boost in investment and economic growth as the Syrian conflict exerts less of a negative influence on the country.”
Fitch Solutions believe that Iraq in particular has the potential for the greatest improvement in its RRI score over coming quarters.
“With IS having now lost its territorial presence in the country, the security situation is stabilising and allowing reconstruction efforts to get underway.
Iraq’s construction sector, it said will benefit from aid assistance from multilateral lending institutions as well as Chinese financing and greater public funding for reconstruction, supporting growth and opportunities in infrastructure.
“We are forecasting growth of 10% in the construction sector in 2019, driving a high industry rewards score of 74 .1 out of 100,” Fitch Solutions said.