The S&P ratings agency lowered Qatar’s credit rating on Wednesday, in the wake of the decision by neighbouring countries to cut diplomatic and trade ties with Qatar.
S&P Global reduced the country’s credit rating to AA- from AA, after noting many uncertainties in the near future. The ratings agency also put the nation on a negative watch.
The move comes after a group of countries, including Saudi Arabia, Egypt, Bahrain and the United Arab Emirates, cut diplomatic and trade relations with Qatar after accusing them of supporting terrorist groups. Qatar has denied the accusations.
On Tuesday Saudi Arabia announced that it had banned the operation of Qatar’s airline in the country, giving Qatar citizens 14 days to leave the country. Qatar has sine had to deal with suspended flights and concern over food shortages.
S&P said on Thursday: “We believe this will exacerbate Qatar’s external vulnerabilities and could put pressure on its economic growth and fiscal metric”, adding that recent events may “provoke an outflow” and “destabilise” non-resident deposits.
S&P noted that the six states involved in the blockade account for 10 percent of Qatari exports and 15 percent of its imports, signalling the potential to have a significant impact.