DOHA, QATAR”•Qatar’s economy has been hit by the sanctions imposed by a Saudi-led Arab bloc but the emirate’s economy is strong enough to survive, analysts say.
Since June 5, Saudi Arabia and allies Bahrain, Egypt and the United Arab Emirates shut down air, maritime and land links with Qatar, and imposed economic sanctions, accusing Doha of supporting “terrorists” and of being too close to Iran.
Qatar, denying the charges, accuses its Gulf neighbors of seeking to strangle its economy.
The heavily air-conditioned malls of Doha, a city in the throes of a $200-plus billion construction boom as it aims to make a splash on the world stage by hosting football’s 2022 World Cup, remain busy as ever, as do its roads.
To counter the sanctions and trading curbs, ally Turkey and neighboring Iran have been pouring in food supplies by air and sea.
“In the medium- to long-term, perhaps people who live here will feel” the effects, but for the time being, “we haven’t felt any big difference”, said Mohamed Ammar, who heads the Qatari Businessmen Association.
For Rashid bin Ali al-Mansoori, CEO of the Qatar Stock Exchange, the worst is already over. The second most highly-capitalized bourse in the Middle East plunged seven percent on June 5 and lost almost 10 percent in the first three days.
“We were surprised and the market also was surprised, so the market really reacted to the news like any other market of course,” he said.
But “the Qatar economy is very strong, it’s the strongest economy in the region… investor trust and confidence in the market is still there,” said Mansoori.
The level, however, remains around six percent lower than during pre-crisis Qatar.
And analysts are predicting a long drawn-out crisis which will affect investor confidence, with Bloomberg assessing at the end of July that Qatar’s economy was showing “the strain.”
“Data released last week showed that foreign deposits at Qatar’s banks fell the most in almost two years last month as customers withdrew funds, pressuring liquidity available locally for businesses and the government,” it said.
Amy McAlister of consultancy firm Oxford Economics said central bank data showed reserves were running at their lowest level since May 2012, a slide of 30 percent compared with June 2016.
“Uncertainty will have prompted banks and portfolio investment funds to withdraw money from Qatar, leading to a fall in reserves as the central bank tries to ease liquidity pressures,” she said.
“The central bank will have also depleted reserves to support the currency peg to the US dollar, which has seen pressure since the dispute began.”