Event

Sheikh Tamim bin Hamad Al-Thani has become the new emir of Qatar. The 33-year-old emir succeeds his father, sheikh Hamad bin Khalifa Al-Thani, who had been ruling the peninsula since he came to power in 1995 after a bloodless coup. At the same time, a new cabinet was appointed, which included the replacement of the powerful Prime Minister and Foreign Minister Hamad bin Jassim.

Impact on country risk

No radical changes are expected under the new emir, who has inherited the rule over a country that has gone through a radical turnover under the former emir. It is however possible that Qatar will assume a less assertive international strategy than in previous years, focusing more on domestic economic challenges, including further developing economic diversification and organizing the FIFA World Cup in 2022. During the past decade, Qatar saw a firm economic growth thanks to the expansion of its LNG sector, the country being endowed with the largest conventional gas field in the world. Although it is making work of an ambitious diversification strategy,  so far it  remains highly dependent on its hydrocarbon sector which continues to represent more than three quarters of its export revenues. The emirate has been running large current account surpluses, currently at more than 25% of GDP. As a consequence, it has seen its external assets skyrocket (mainly through its sovereign wealth fund, the Qatar Investment Authority). These are even estimated to double the country’s external debt, which has also multiplied in recent years, although comprehensive financial economic data are missing. Qatar’s dependency on hydrocarbon exports is currently mitigated by its low production costs, large gas reserves, diversified export destinations and financial buffers. But uncertainty remains with regard to the eventual success of the country’s diversification strategy in which it is investing a lot. This will be the most important challenge for the new emir.

Analyst: The Risk Management Team,  r.cecchi@credendogroup.com