Qatar Investment Authority’s assets provide “strong support” for the country’s currency peg to the dollar, EIU has said in its latest update.
“Currency risk is BB-rated,” the Economist Intelligence Unit said, and noted the ‘threat of capital outflows’ in the wake of the blockade of Qatar (imposed in June 2017) by a quartet of Arab nations has ‘largely subsided’ with the ‘recovery and subsequent stabilisation’ of foreign reserves and the return to a current-account surplus in 2017.
“The surplus will be maintained in 2020 21, albeit at a lower level,” EIU estimated.
Qatar's ability to fully service its debt obligations remained unchanged, the Economist Intelligence Unit noted.
EIU has given a ‘BBB’ rating on the sovereign risk and said, it is “supported by ample foreign reserves and the assets” of the Qatar Investment Authority (QIA), the sovereign wealth fund.
On the liquidity of commercial banks in the country, EIU noted that the local lenders have been increasing liquidity from abroad in the form of a number of debt issues, and cash injections from the QIA have further “bolstered” their liquidity.
“The banking sector risk is BB-rated. It is supported by a strong regulatory framework and solid capital and liquidity indicators,” EIU said.
It said the country’s “sound financial system is supportive” although high stock of public debt weighs on the outlook.
The economic structure risk is B-rated. Qatar's “overdependence” on hydrocarbon exports generates some economic risk, EIU said.
In an earlier update, EIU said Qatar’s real economic growth will “remain stable” throughout most of the long-term forecast period.
However, economic diversification investment projects will sustain robust growth until 2030, before slowing thereafter. “There remains potential for bursts of high growth if further gas export projects, beyond those planned for the mid-2020s are approved by the government,” EIU said.
Diversification and the expansion of the services sector, funded by the state's hydrocarbons wealth, will also provide opportunities for growth, it said.
The country’s population will continue to increase, largely through immigration, to 3.9mn in 2050. As a result, growth in real GDP per head will be much slower than growth in real GDP, EIU noted.