The boom in bank lending in Qatar in the 2010s has unwound so far in a relatively orderly manner. Banks are well capitalised and are able to absorb a far greater rise in non-performing loans than we have seen. Still, there are lingering vulnerabilities created by the past credit boom, notably that banks are much more dependent on external financing; a sharp deterioration in external financing conditions could cause domestic credit conditions to tighten abruptly.
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