Given Qatar’s large financial buffers, main infrastructure projects in the country will carry on, a senior analyst has said.
“As such, we do not expect Qatar to significantly draw down on its reserves or assets,” said Raphaele Auberty, Mena Country Risk analyst at BMI Research.
“We do not believe that Qatar’s commitment vis-à-vis FIFA World Cup 2022 are at risk, with projects financed by an increase in non-oil revenue –through the introduction of a value-added tax in 2018 and new fees on expatriates – and by debt issuance,” Auberty told Gulf Times.
These infrastructure-related projects, he said, are crucial to economic diversification in Qatar and will continue to drive the country’s GDP growth over the next decade.
That said, Auberty felt that growth rates would remain well below average annual growth of 13% seen between 2005 and 2014.  
For Qatar, huge financial reserves and still-strong revenues from the country’s gas sector will ensure continued public sector spending ahead of the FIFA World Cup in 2022.
This, along with a temporary blip in real hydrocarbon growth as phases one and two of the Barzan gas project are finalised, will ensure that Qatar’s economic growth trajectory remains well above that of other GCC states, BMI Research said.
All six Gulf Cooperation Council economies will record a sharp slowdown this year and 2017, amid public spending cuts, tightening liquidity conditions, and widespread investor uncertainty, BMI said.
From 2017, it expects a notable divergence in growth between these states, with the UAE and Qatar outperforming, while Saudi Arabia will be the laggard.
Nearly two years after the start of the collapse in global energy prices, the economic outlook for the six GCC economies has clearly deteriorated. Corporate sectors across the region are facing a much more challenging environment, amid waning fiscal support to the economy; rising financing costs due to tightening liquidity conditions; higher fuel and utility costs; and the new strains on consumers’ purchasing power.
While BMI Research does not expect any of the region’s economies to fall into recession this year, growth will slow considerably after half a decade of rapid expansion. BMI Research also expects the GCC countries to increasingly turn to the external bond markets for financing, in order to rebalance deficit coverage away from foreign exchange reserves while easing the pressure on domestic banks.
Saudi Arabia is reportedly seeking to borrow up to $8bn from international banks before the end of the year, and we expect the country to rapidly emerge as the preeminent debt issuer of the Mena region over the coming years.
However, it said reliance on foreign debt will increase even as financing conditions across the region harden, on the back of a continued stream of downgrades to the GCC countries credit profiles from the major credit rating agencies, the Fed’s interest rate hikes, and more modest support from local investors.