Qatar crisis can weaken confidence in economy, investment: IMF

CAIRO- 30 August 2017: The diplomatic rift of four Arab states with Doha will possibly weaken confidence in the Qatari economy and reduce investment and growth, the International Monetary Fund (IMF) said in a Wednesday research note.

Qatar’s economy was seen as adjusting to market shocks that came following the June 5 decision of four Arab states to cut diplomatic and trade ties with the small-sized Gulf country, IMF’s assistant director Mohammed el-Qorachi said in the note.

The statement came as a result of an IMF delegation, led by Qorchi, which visited Doha from August 13-20 to review recent economic developments since December 2016.

“The initial concern that trade disruptions could impact the implementation of key infrastructure projects has been mitigated by the availability of an inventory of construction materials and of alternative sources of imports,” Qorachi said.

Qorachi predicted Qatar’s non-oil growth to decline to 4.6 percent in 2017, from 5.6 percent in 2016, as a result of the fiscal consolidation and trade diversion.
Commenting on the impact of the rift on the banking sector, Qorachi said the outflow of deposits by non-residents was controlled by liquidity injections by the Qatar Central Bank and increased public sector deposits.

Sanctions imposed by three other Gulf states and Egypt affected Qatar's imports, which declined 40 percent in June to register QAR 5.9 billion.

Qatari imports were majorly affected by trade boycott from neighboring countries, as United Arab Emirates’ exports to Doha slumped 64.5 percent month-on-month in June.

Deposits of non-residents of Qatar in 18 banks dropped 7.6 percent to QAR 170.6 billion ($47 billion) in June from a month earlier, according to the Qatar Central Bank.