Dun & Bradstreet rating declares Qatar a stable place for business

The DB country risk indicator is released monthly and provides a comparative, cross-border assessment of the risk of doing business in a country.

The DB risk indicator is a composite index of four risk categories: political risk, commercial risk, external risk and macroeconomic risk. The DB risk indicator is divided into seven bands, ranging from DB1 through DB7.

Each band is subdivided into quartiles (a-d) with an 'a' representing slightly lesser risk than a 'b' designation and so on.

While Qatar initially appeared to be immune to the global financial crisis, the emirate is experiencing some significant negative impacts. The banking sector is facing problems of liquidity, thus raising the costs of inter-bank lending and therefore credit to the private sector.

In order to improve liquidity, the Central Bank of Qatar has announced a $25bn plan to take stakes of between 10-20% in all national banks. Further, the collapse of the oil prices from over $145/b in July 2008 to under $60/b in mid-November 2008 will curtail government revenues and thus curtail government investment plans in the short to medium term, thus putting downward pressure on real GDP growth.

However, this slowdown in investment plans has some positive affects as it will ease the supply-side bottlenecks in the economy, which have been a key factor contributing to the record high inflation levels experienced in Qatar.

As a result, inflation began to ease slightly in Q3 2008, and D&B has reduced the annual inflation forecast to from 14.1% to 13.2% in 2008, and from 11.4% to 10.3 in 2009, although this remains high in historical terms.

Meanwhile, the D&B Business Optimism Index for Qatar Q4 2008 released late September 2008, in association with al khaliji and QFC, amidst slowing global growth and the strengthening of the USD highlighted that business optimism in Qatar remains high.

85% of businesses in the non-oil sector expected an increase in sales and 79% expected an increase in profits during Q4 2008.

The main constraints identified by the Index were concerns over falling oil and gas prices generally, but in particular for the hydrocarbon sector, concerns over rising input prices for the import-intensive, while the construction sector identified supply-side bottlenecks as a constraint.

Overall, the generally robust economic situation means that Qatar maintains a DB2a "Low Risk" rating.