Diplomatic and economic sanctions to have huge impact on Qatar’s econo

(6/19/2017 1:47:00 AM)

Recent diplomatic and economic sanctions on Qatar by a group of states led by Saudi Arabia, the UAE, Bahrain, Egypt, Libya, Yemen and a few other allied countries is expected to have severe consequences on Qatar’s economy if the impasse is to continue for a longer period, according to analysts.

The political rift has created much uncertainty and is likely to impact the flow of people, trade, and capital which could delay the execution of projects as Qatar prepares to host World Cup 2022.

With the crisis getting stretched, analysts fear a prolonged isolation of Qatar’s economy by its neighbours could result in Qatari economy facing sharp decline in growth.

According to Institute of International Finance (IIF), a Washington headquartered global association of the financial services industry, if the current crisis persists for an extended period and ties deteriorate further, Qatar’s GDP growth could decline to 1.2 per cent in 2017 and 2 per cent in 2018, principally due to lower non-hydrocarbon growth impacted by increased uncertainty weighing on investment and a tighter financial environment and perhaps deposit flight which could raise the cost of funds.

Qatar losing out on food and LNG

Cuts in financial ties and increased counterparty concerns could hinder ease of doing business and trade finance. “In this scenario, lower than expected nonhydrocarbon revenue could widen the deficit fiscal deficit to 7.8 per cent of GDP in 2017. The external current account deficit could remain at around 2 per cent of GDP as the sharp fall in travel and transport related service receipts due the prolonged travel bans of neighbours and airspace closures,” said Boban Markovic, Research Analyst at IIF.

While global credit rating agency Standard & Poor’s has downgraded the sovereign ratings of State of Qatar and changed the outlook of some of the leading corporate entities with negative implications, other rating agencies have warned of potential rating downgrade and or change in outlook to negative.

Dubai: Recent diplomatic and economic sanctions on Qatar by a group of states led by Saudi Arabia, the UAE, Bahrain, Egypt, Libya, Yemen and a few other allied countries is expected to have severe consequences on Qatar’s economy if the impasse is to continue for a longer period, according to analysts.

The political rift has created much uncertainty and is likely to impact the flow of people, trade, and capital which could delay the execution of projects as Qatar prepares to host World Cup 2022.

With the crisis getting stretched, analysts fear a prolonged isolation of Qatar’s economy by its neighbours could result in Qatari economy facing sharp decline in growth.

According to Institute of International Finance (IIF), a Washington headquartered global association of the financial services industry, if the current crisis persists for an extended period and ties deteriorate further, Qatar’s GDP growth could decline to 1.2 per cent in 2017 and 2 per cent in 2018, principally due to lower non-hydrocarbon growth impacted by increased uncertainty weighing on investment and a tighter financial environment and perhaps deposit flight which could raise the cost of funds.

Qatar losing out on food and LNG

Cuts in financial ties and increased counterparty concerns could hinder ease of doing business and trade finance. “In this scenario, lower than expected nonhydrocarbon revenue could widen the deficit fiscal deficit to 7.8 per cent of GDP in 2017. The external current account deficit could remain at around 2 per cent of GDP as the sharp fall in travel and transport related service receipts due the prolonged travel bans of neighbours and airspace closures,” said Boban Markovic, Research Analyst at IIF.

While global credit rating agency Standard & Poor’s has downgraded the sovereign ratings of State of Qatar and changed the outlook of some o

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