The stronger dollar has supported the pegged Qatari riyal, Oxford Economics said and noted there is only a “very small chance of depegging even if co-ordination over policy with other Gulf countries continues to suffer.”

In its latest country report, Oxford Economics said, “Under our methodology, exchange rate risk is now 3.0, up 0.8 from six months ago but well below the MENA average of 4.6.”

As a result of strong growth, Qatar’s GDP per capita (on a purchasing power parity basis) has also risen rapidly to make Qatar officially the wealthiest country in the world — IMF data for 2020 put GDP per head on a PPP basis at $138,910 and it is expected to continue rising, Oxford Economics noted.

Qatar also has one of the most advanced and extensive welfare and free education systems in the Gulf (GCC) region. A heavy investment and diversification strategy has transformed the economy, enabling a doubling of GDP and exports in five years and producing budget and current account surpluses.

The fiscal surplus was some 15.5% of GDP in 2013/14 and the current account surplus has typically been some 15-30% of GDP in recent years until the downturn in the oil price. While oil production capacity continued to increase, it was the investment in two LNG projects (Qatargas and then RasGas) that changed the country’s fortunes, backed by the largest non-associated gas field in the world and the second highest proven gas reserves in the Middle East after Iran. Qatar remains the world’s largest LNG exporter, it said.

There is also heavy investment in gas-to-liquids, petrochemicals, a gas export pipeline, infrastructure and tourism. Some $200bn is being spent on infrastructure between 2015 and 2020, partly related to the 2022 football World Cup and partly related to an expanding population and the country’s long-term strategy, Qatar National Vision 2030.

In addition, Qatar is developing into a significant regional financial and educational centre, Oxford Economics noted.

While the external debt burden became large due to heavy investment in a relatively short period of time, it then fell markedly as a ratio to GDP, before picking up again since 2015 as the oil price plummeted. But it is not seen as particularly worrying given the large but undeclared foreign assets (including some $37bn of official reserves as at late 2017), the sustained current account surpluses (until 2016), rapid economic growth and access to cheap external borrowing thanks to its high, albeit falling, sovereign credit ratings.

The country’s large external surpluses have been invested abroad in property, financial, retail and other sectors by the Qatar Investment Authority (QIA), which is estimated by the Sovereign Wealth Fund Institute to have assets in excess of $300bn, and the aim is to reduce the state’s reliance on oil and gas earnings, Oxford Economics said.

Related Story