Consumption lending in Qatar to see strongest growth this year: S&P

Consumption lending in Qatar to see strongest growth this year: S&P

Consumption lending in Qatar is likely to see the strongest growth, buoyed by the FIFA World Cup at the end of the year and positive sentiment stemming from high natural gas prices, according to Standard & Poor's (S&P), an international credit rating agency.

However, the rating agency expects the overall private sector credit to grow 5% in 2022, less than half the average rate seen over the previous three years.

The government construction projects, the main growth spur previously, have mostly been completed, which is shown in banks' first-half performance. Overall credit could reduce slightly if lending to the government continues to decline in the second half, which "we view as likely given our projected fiscal surplus of about 12% of GDP (gross domestic product)", it said.

Finding that banks' "significant" exposure to the wealthy public sector will continue to support solid asset quality; S&P said its projections anticipate that central bank rate hikes, following those by the US Federal Reserve, could pressure some Qatari borrowers, with a marginal effect overall.

However, high inflation in Turkey, and to a lesser extent Egypt, will likely be more material contributors to cost of risk over 2022, which it still estimates at pandemic levels of about 100bps