Qatar has had its rating of AA/A-1+ affirmed with a stable outlook by rating agency Standard & Poor’s.

The rating agency based its rating decision on forecasts that Qatar’s economy will continue to grow at an average annual rate of 4 per cent and will be sustained by the government’s planned $220bn investment programme.

The GDP growth levels are far lower than that the 17 per cent annual growth seen in 2010. 

Qatar’s economy will continue to be supported by the hydrocarbons sector which accounts for 55 per cent of Qatar’s GDP and 90 per cent of government royalties.

S&P currently views the Qatari economy as undiversified and reliant on the oil and gas industry. However, it notes that the non-oil sector should remain “buoyant” and continue to grow due to public investment and a growing population.

Qatar will face a number of medium to long-term challenges to its position in the liquefied natural gas (LNG) market, says S&P. These will come from new shale production and Russia’s gas pipeline to China. Asian countries are major buyers of Qatar’s LNG.

S&P notes Qatar will be able to counter these challenges by continuing to diversify its export markets.

The agency forecasts that Qatar’s general government balance will fall into a “modest deficit” this year and in 2016 as growth in the oil sector stagnates.

The country’s oil production will decline as output from maturing fields contracts while gas output is forecast to remain flat, which will affect government finances.

S&P forecasts an average decline in crude oil production of about 5 per cent between 2015-2018.

Within the non-oil sector, Qatar is planning to award around $220bn-worth of large-scale investment projects over the next decade, with the majority to happen before the Fifa World Cup in 2022.

Although some projects will be funded directly from the government budget, public enterprise and private-sector spending is likely to be funded by borrowing from the country’s highly liquid domestic bank market.