Experts: Qatar’s economy is entering a slowdown and is preparing for deflation

Experts: Qatar’s economy is entering a slowdown and is preparing for deflation

“The Qatari crisis is becoming more complex, and the country’s economy, especially the banking sector, is facing increasing challenges,” said Reda Mosallam, managing partner of Truth Economic Consultancy. “The surplus in the Qatari sovereign fund will not solve this dilemma.”

“The economic wheel has slowed down now in the Qatari market, due to the decline of the market and the available options for investors, financiers and sources of financing, which will further weaken the Qatari economy,” he added.

He explained that the country funds can not compensate the work and investment, there are products and services slowed down significantly, which cast a direct shadow on monetary policy and banks.

“The cost of financing construction projects has increased, and the cost of construction has doubled not only because of the high cost of financing, but also because of the high cost of imports and exports,” he said.

“The options available for supply to the Qatari market, and the lines of transport and shipping, are becoming more limited and more expensive. This affects the delivery times, the ability of the contractors to deliver, and the delivery of their projects on time,” he added.

“This puts the financing banks in a dilemma, because they will face a delay in payment, which will force them to take more provisions, review applications and finance, and this is an indication that growth opportunities will be very limited, In the absence of the necessary funding, which is the lever of economic growth.”

“This coincides with rising of interest costs, as well as insurance and reinsurance rates on loans and financing, due to Qatar’s low credit rating, which is the basis for pricing by international insurance companies,” he said.

He stressed that if the situation continues as it is, the Qatari economy will face big and serious challenges in the coming months.

He pointed out that in the past years, the Qatari economy has not been able to reach the stage of diversification of sources of income and the ability of access to the business and production sectors to the stage of self-production, where the options narrowed and the cost doubled. The size of the Qatari market is too small to be able to withstand by itself or growth separately from its surrounding and the GCC common market, which is form a real lever for growth for the economies of the region, according to criteria for attracting investment and capital, and the feasibility of investment spending.

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