Doha – Mubasher: S&P Global ratings agency has downgraded Qatar’s sovereign credit rating to “AA-“ from “AA” after several Arab countries in the MENA region broke off their diplomatic and trade relations with Qatar, media reports said.
This downgrade was due to the Qatari riyal’s decline to the lowest level in 11 years.
"We believe this will exacerbate Qatar's external vulnerabilities and could put pressure on its economic growth and fiscal metrics," S&P said in its report.
The global ratings agency expects Qatar's economic growth to slow down, as regional trade decreases and corporate profitability collaboration declines.
“Corporate profitability is damaged because regional demand is cut off, investment is hampered, and investment confidence wanes," S&P Global revealed.
"In our opinion, recent events have the potential to destabilise these no-resident deposits and provoke an outflow," S&P added, indicating that Qatar may need to use funds from the Qatar Investment Authority (QIA) and the sovereign wealth alongside the Qatar Central Bank’s (QCB) reserves to handle any major outflow.
S&P put the rating on CreditWatch Negative, which means there may be a further downgrade, Reuters reported.
