IMF says economic impacts of Qatar blockade fading, dashing Saudi hopes

The International Monetary Fund (IMF) says the economic impacts of the nine-month blockade by a Saudi-led quartet of Arab states against Qatar are fading. The announcements dashes Saudi hopes that the siege would force Doha into submission on matters of foreign policy.

In a Monday report, the IMF described the economic effects of the blockade on Qatar as “transitory,” noting that the emirate’s growth remained positive as new trade routes were quickly established after the Saudi-led blockade.

Cash injections by the Central Bank and the Qatar Investment Authority also offset a $40-billion decrease in foreign financing and resident private sector deposits caused by the economic and diplomatic boycott, the IMF said.

It also said that although the emirate’s economy and banking and financial systems remained sound, some risks remained, including the possibility of lower hydrocarbon prices and uncertainty related to the continued impact of the diplomatic crisis.

The IMF called on Qatar’s banking system to adjust to a new funding model, as an escalation of the dispute with the Saudi-led quartet could have an adverse effect on the country’s external funding and growth.

A mixture of austerity measures — prompted by falling fossil fuel prices — and the blockade caused Qatar’s non-hydrocarbon growth to fall to 4.0 percent in 2017 compared to 5.6 percent in 2016, the report said.

However, Qatar’s gross domestic product saw a 2.1-percent growth in 2017, which showed only a negligible drop compared with the 2.2-percent growth registered in 2016.

SS