Qatar growth to gain momentum; country to remain large net external creditor: Euler Hermes
January 17 2022 11:11 PM
Euler Hermes
Euler Hermes

Qatar will remain a large net external creditor, thanks to the huge foreign-asset position in its sovereign wealth fund, trade credit insurance firm Euler Hermes said in its latest economic update.
Euler Hermes sees strengthening growth and falling inflation in Qatar this year and noted recovery is forecast to gain momentum in 2022, thanks to continued higher gas prices and a high Covid-19 vaccination rate that should allow for a further reduction of lockdown measures and support consumer spending.
The FIFA World Cup Qatar 2022 later this year should also support economic growth through increased tourism revenues.
“Our tentative growth forecasts are around 4% in 2022 and 2.5% in 2023. However, potential renewed restrictions, for example due to the outbreak of new Covid-19 variants, or sustained supply-chain disruptions in the industrial sector pose downside risks to our forecasts,” Euler Hermes said.
Fiscal reserves are solid and Qatar’s fiscal breakeven point ranged between $35 and $55 a barrel of crude oil over the past decade. Hence the government has recorded large annual fiscal surpluses in most years, except for 2016-2017 when oil and gas prices had been persistently low for some time.
Even in 2020, a small surplus of 1.3% of GDP was achieved.
“We estimate the surplus to have widened to around 3% in 2021, thanks to higher gas prices, and project continued robust surpluses in 2022-2023. Meanwhile, public debt rose from 25% of GDP in 2014 to 72% in 2020, in part due to declining nominal GDP.
“Even though we expect the ratio to decline gradually over 2021-2023 in the wake of the economic recovery, it will remain elevated. Overall, however, Qatar will remain a large net external creditor, thanks to the huge foreign-asset position in the Qatar Investment Authority (QIA, a sovereign wealth fund currently estimated at approximately $350bn).”
According to Euler Hermes, Qatar’s external liquidity will “remain unproblematic”. Qatar has recorded large, sometimes huge annual current account surpluses for more than two decades, with the exceptions of 2016 and 2020 when global oil and gas prices were particularly low. These surpluses have contributed to the build-up of the QIA.
“We estimate that higher oil and gas prices moved back the current account into a surplus of +5% of GDP or more in 2021 and that ratio should rise further in 2022-2023. Meanwhile, external debt is relatively high, estimated at around 120% of GDP, incurred by oil and gas investments since the 2000s, but repayment obligations are unlikely to present liquidity problems.
“The annual debt service-to-export-earnings ratio stands at a moderate 13% or so. Financial resources will remain strong. Combined foreign exchange reserves of the central bank and the QIA represent over 200% of annual GDP and cover more than 50 months of imports,” Euler Hermes noted.

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