Boston, MA -- (ReleaseWire) -- 05/05/2014 -- Qatar's short-term political risk profile remains among the most stable in the region. Despite enjoying little in the way of democratic freedom, Qataris benefit from massive hydrocarbon wealth which is spread generously across the country's native population and enjoy the highest per capita GDP in the world. A small population - and one without much inclination to protest against the government - will keep the country insulated from large-scale public unrest in the immediate term.
Sheikh Tamim bin Hamad Al Thani became the new ruler of Qatar in June 2013, in a peaceful handover from his father, Sheikh Hamad bin Khalifa. The 33-year old Emir's first public address and the composition of his new cabinet suggest that policy continuity will be the order of the day, in line with our view.
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Strong growth in the non-hydrocarbon economy, stemming from extensive construction activity and the rapid expansion of the services sector, will drive economic activity over 2014 and 2015. We forecast real GDP of 5.4% this year and 4.9% in 2015, from an estimated 5.7% in 2013.
Key Risks To Outlook
Given the economy's heavy reliance on the hydrocarbon sector, a pronounced global economic downturn - if it were to translate into a sustained drop-off in demand for oil and gas - could impact negatively on our forecasts for Qatar's external account position, budget and growth outlook. That said, we highlight that the country's US$115bn sovereign wealth fund - as well as its continuing ability to tap international debt markets - provides the economy with significant bulwarks against these risks.
The Qatari government's increasingly assertive foreign policy raises some risks in relation to the outlook for regional political stability. In particular, we highlight the potential for the country's foreign policy to provoke a backlash in the region and the danger that the government could become bogged down in a drawn-out conflict in the Middle East. The withdrawal of three GCC countries' ambassadors from Doha in March 2014 poses a further challenge.
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