Opinion poll and economic experts: Bleeding sustained losses and tax cuts threaten major projectsTruth Consultancy
The inevitable collapse of Qatar’s economy if its hostile positions continue
• Abu Dhabi – Al Bayan
Date: 14 June 2017
A survey by Al-Bayan on websites, social networking accounts and economic experts confirmed that the Qatari economy is subject to a comprehensive collapse if Doha continues to be stubborn with its Gulf neighbors.
Experts stressed that the Qatari economy will suffer large losses in the medium and long term, especially with the erosion of the Qatari sovereign fund and the high cost of lending to the Qatari government and Qatari companies from international markets, especially after the reduction of their credit rating and the collapse of their national currency.
In a survey conducted by Al-Bayan on the prospects of Qatar’s economy performance, 60% agreed that if Doha continues its anti-GCC stance, the Qatari economy is liable to suffer heavy losses, collapse and the evaporation of its sovereign assets.
Twenty-five percent of the respondents believed that the biggest negative impact of the Qatari crisis was the Qatari economy’s heavy losses, followed by the Qatari economy’s collapse by 11%, while 4% said the results would be more pronounced in the evaporation of Qatar’s sovereign assets.
The results of the survey were very similar to the results of the survey on social networking sites with Al-Bayan poll. 43% of the respondents said that the biggest risk to the Qatari economy is the huge losses to the economic sectors in Qatar, followed by 7% % That the repercussions will appear more in the evaporation of Qatar’s sovereign assets.
Economists and financial analysts agreed with the results of the surveys, stressing the large and serious losses currently suffered by the Qatari economy in the future, stressing that the continuation of the Qatari crisis in the medium and long term will lead to the suspension of most development projects in Qatar, especially with the continued reduction of the credit rating of Qatar and its banks, They stressed that the Qatar sovereign fund will not mitigate the repercussions of the crisis on its economy, which is witnessing an unprecedented slowdown will continue in the coming period and that the Fund will suffer from great pressure suffered large losses.
Financial experts and analysts pointed out that Qatar’s continued stubbornness will inevitably lead to a further reduction in its credit rating and an increase in the cost of lending from international markets, as well as that its major companies will face significant difficulties in borrowing.
Mohammed Ali Yasin, chief executive officer of Abu Dhabi National Securities Company, said that the Qatari economy is under intense pressure to enter a slowdown and a sharp downturn. If the Qatari crisis continues for several months, the impact will be severe on the economy in general and the Qatari riyal Specially.
He pointed out that the continued slowdown in economic growth in Qatar will be due to a number of factors, the most important of which is the decline in international direct investment in Qatar, in addition to the difficulty of borrowing Qatari companies from abroad and the decline in levels of trade between Qatar and many Gulf and Arab countries. And will be subject to a sharp decline in profits and in general will decline confidence in national and foreign investment within Qatar.
Mohammed Ali Yasin said that the past few days proved beyond doubt the damage caused by severing relations with Qatar, which had a direct impact on the Qatari stock market and the bleeding of the losses caused by the general index of the Doha market as a result of panic investors, institutions and financial and investment portfolios. The trade exchange between Qatar and the three Gulf countries and other Arab countries has declined significantly and its negative effects on Qatar’s macro economy have been felt as the Qatari market relies mainly on imports from abroad.
Yassin pointed out that it is in the interest of Qatar to expedite the resolution of its crisis with the UAE, Saudi Arabia, Bahrain and Egypt, pointing out that Qatar and its financial institutions are facing real difficulties despite the denial of the Qatari finance minister yesterday to these difficulties, and certainly Qatar depends on borrowing from abroad to finance its major projects. The credit of Qatar and its banks has increased. The cost of lending, which threatens any international financial institution to extend loans to Qatar and its companies and banks, especially with the continuation of the crisis on the long term and certainly, Qatar is not economically secure at all.
“The Qatar economy will not be able to collapse quickly,” said Amjad Nasr, an economist. “Qatar’s sovereign fund may help Qatar temporarily survive, but at a long run the fund will be eroded and the Qatari economy will suffer very high losses. Of the State of Qatar.
And that the economic consequences of the crisis have negative consequences on Doha both at the level of foreign and national investments or the continued pace of implementation of development projects in Qatar or the risks to the large Qatar Airways or the import of food, medicines and equipment.
Amjad Nasr noted that the continued slowdown in economic growth in Qatar will be very significant in the coming days and months. The crisis will have serious and rapid repercussions on the aviation sector. Qatar Airways has established itself as a major airline by connecting Asia and Europe via Doha. Is now facing great difficulties as a result of the closure of the airfields of the boycotting countries. The company has undoubtedly lost very important markets, and the change of routes has added more time to flights and increased the cost of fuel bills to Qatar Airways.
He said the increase in flights to Europe, for example, would increase for four hours or more, as well as in other parts of Africa, making Qatar Airways less attractive and losing the prestige it has built over the past years. Saudi Arabia, UAE, Bahrain and Egypt continue to stop flights to and from Qatar. The Qatari economy will suffer heavy losses, especially as Qatar’s aviation sector is one of the most important sectors of economic diversification.
Moody’s credit rating and investor services cut Qatar’s credit rating to Aa3, the fourth-highest investment grade, raised doubts about the future growth of the Qatari economy.
The downgrade of Standard & Poor’s credit rating agencies to Qatar’s debt, with the Qatari riyal falling to an 11-year low, is seen as a significant sign that the funds of portfolio investment funds will be out of the crisis in the coming period. Standard & Poor’s downgrade its long-term debt rating Term AA to AA from AA and placed on the credit watch list with negative implications should worry Qataris and prompt them to meet the demands of the UAE, Saudi Arabia, Bahrain and Egypt.
A senior financial expert who spoke on condition of anonymity said that the Gulf financial community did not expect Qatar’s credit rating to be lowered so quickly, pointing out that this reduction will have a serious and significant impact in the coming days and months.
He said that the decision to sever relations with the State of Qatar had a direct impact on a number of economic axes Qatar, led by the loss of the index, as a result of panic investors, institutions and financial and investment portfolios, and resort to random sale, liquidation of financial centers, and suffered heavy losses as a result of the decision to exit the market.
He pointed out that the Qatari stock market witnessed severe losses on the impact of the crisis, as the Qatar Stock Exchange index fell nearly 12% during the week before last, while its main index fell from 10123 to 8912 before rebounding slightly at the end of this week as a correction , And will likely retreat again over the next few weeks targeting new support levels with a range of psychological support at 8,000 points. Qatar’s sovereign debt securities also declined as the cost of sovereign debt insurance rose to its highest level.
Qatar’s five-year credit risk swaps rose to their highest level since early April, and Moody’s said that the crisis could negatively affect Qatar’s credit rating if it would disrupt trade and capital flows.
He added: As an Arab financial analyst, I emphasize that the repercussions on the Qatari economy and its mega development projects will be very serious if the crisis continues for several months and Qatar will not find its projects to be easily funded in international markets.
Reda Mosallam, general manager of Truth Economic Consultancy in Abu Dhabi, said all Qatari economic sectors were seriously affected by the decision to break ties with the UAE, Saudi Arabia, Bahrain and Egypt.
Pointing out that the repercussions are beginning to appear on the real estate sector as most of its projects are financed by loans from foreign banks and local and no doubt the cost of lending will increase as the equipment giant and building materials needed by the real estate sector in Qatar will not enter as easily as before.
Qatar’s construction sector will falter and its major projects in the long run may be gradually disrupted by the Gulf break-off of Qatar, with many major construction projects underway in Qatar now due to preparations for the 2022 World Cup.
The shortage of building materials poses a threat by pointing out that the main materials, including concrete and steel, come through the land border with Saudi Arabia. Hundreds of trucks pass through the Qatari-Saudi border every day and international financial institutions will not be eager to lend to major real estate companies.
He pointed out that the trade exchange will have a negative impact on the movement of trade with the State of Qatar, especially that 12% of the total Qatari trade is through the GCC countries, and that 89% of Qatar’s imports come from the Gulf countries. More than 82% of Qatar’s imports from the outside world.
He explained that the Qatari economy will not collapse between day and night, but certainly the continuation of the crisis will lead to the loss of the Qatari economy to the most prominent advantages are attracting foreign investment and ease and flexibility of the business environment.
He added that the Qatari economy will be subject to severe suffocation in the coming period because of the boycott decision by Saudi Arabia, the UAE and Bahrain, although the supply of food to Turkey and Iran may continue in the coming period but will not compensate for the huge quantities that were imported through the UAE and Saudi Arabia.
The food markets in Qatar will see a significant shortage of commodities and commodities, especially if the crisis continues for a longer period. If Qatar continues to supply food from Iran and Turkey, the cost of goods will rise and we will see worrisome waves of inflation that will stifle the Qatari economy.
Reda Mosallam said that Iran and Turkey were expected to rise to provide food to Qatar. This was not strange or unusual, but Qatar’s reliance on Iran and Turkey to provide all its food needs is questionable because the cost of imports will be very high. Imported goods will not be in the quantities of goods imported from different countries of the world before the boycott, not quality or distinctive specifications and this will be a narrow and a great injustice to the Qatari national port who lived for many years eating the finest foods and wearing the most expensive clothes.
Economic expert Reda Mosallam expressed his hope that the Qatari crisis would be solved. He pointed out that if the crisis with Qatar is not resolved in the coming days, the Qatari economy will face severe consequences and the current suffocation will increase.