The recent upgrade of Qatar’s banking sector by the global credit rating agency Moody’s Investors Service was not an unexpected announcement. The positive developments in banking industry and Qatar’s economy had already signalled that such a announement was expected anytime.
Moody’s Investors Service, on thursday, announed that it had upgraded the outlook for Qatar’s banking system to stable from negative. This reflected the resilience of the country’s economy and banking system to the ongoing regional dispute, as well as the stable outlook on the Government of Qatar’s Aa3 long-term issuer rating.
This upgrade was also a big blow to evil intentions of siege countries who have imposed blockade on Qatar since June 5, las year. Through the unjust siege, the blockading countries aimed to weaken Qatar’s economy.
But, contrary to their plans, Qatar turned this blockade into an opportunity and has emerged stronger than ever.
Investors’ confidence is on high and Qatar’s economy is moving going stronger. Qatar’s nominal GDP, measured at current prices, was estimated at QR171.51bn in the second quarter of 2018 (Q2, 2018), registering a remarkable increase of 17.9 percent year-on-year compared to the nominal GDP of QR145.50bn for the corresponding period last year (Q2, 2017), preliminary data released by the Ministry of Development Planning and Statistics showed yesterday.
Moody’s noted that Qatar had been able to rebalance the country’s economy following the regional dispute which began in June 2017, and the high level of government spending on infrastructure in preparation for the FIFA World Cup in 2022 has been unaffected.
Moody’s expects average real GDP growth of 2.8 percent in 2018-2022, up from 1.6 percent in 2017.
Public sector inflows have stabilised domestic liquidity, which have reduced Qatari banks’ reliance on market funding and offset funding pressures caused by the ongoing dispute.
Loan performance will remain broadly stable as the economic slowdown of previous years and continued challenges in the construction and contracting sectors will put only modest pressure on their performance. Tangible common equity at Qatari banks will also remain stable at 15.5 percent of risk-weighted assets, driven by a combination of credit growth and profit retention. Qatari banks’ capital ratios remain resilient even under our high-stress scenario.
Moody’s expects system-wide problem loans to increase slightly, to between 2.2 percent and 2.5 percent of gross loans by 2019, up from 2 percent in June 2018.
With economy moving in full swing and Qatar is set to emerge as a economic powerhouse.
