Qatar’s economy weathers the storm
Experts have concluded that Qatar’s economy remains stable, despite the words of doomsayers earlier this year following the commencement of the blockade.
"Qatar is the most resilient country in the Middle East by far," stated Andreas Krieg, a strategic risk analyst and assistant professor at King's College London university.
As July ended, Bloomberg assessed that Qatar's economy was showing "the strain”, and the recent reduction of direct shareholding in Credit Suisse has raised more than a few eyebrows, though the Qatar Investment Authority (QIA) has declined to comment. (Saudi Arabia’s group Olayan also happens to hold a very large stake in Credit Suisse.)
For the CEO of the Qatar Stock Exchange, Rashid bin Ali al-Mansoori, the worst is already past. In a statement to The Economic Times, he pointed out that "the Qatar economy is very strong, it's the strongest economy in the region... investor trust and confidence in the market is still there.”
Yet it should be noted that the level of investor trust and confidence in Qatar has lessened by six percent from the pre-crisis figure, and may well drop further if it lengthens or escalates. This, of course, depends heavily upon how Qatar handles the various turns of events along the way.
Aside from the fact that Qatar has the third largest reserves of natural gas after Russia and Iran, the country’s wealth in foreign assets is, in a word, enormous. Qatar’s staggering 330 billion dollar sovereign wealth fund is no mere trifle—purchases like Tiffany and Co barely being the tip of the iceberg—with Qatar owning landmark property all over the world, including part of the Empire State building.
In spite of heavy skepticism, the QIA has stated its unwillingness to liquidate assets of the fund. On the contrary, it plans to announce new major international investments soon.
"We have just completed a tour of several countries around the world and you will hear about significant investments soon," Sheikh Abdullah bin Mohamed bin Saud al-Thani stated to the Lusail newspaper.
With 10.4% of the London stock exchange being one of Qatar’s top holdings, one would think that the country is set, but in some ways, this source of certainty may also become one of increasing anxiety.
According to a report in the Financial Times last week, Abu Dhabi launched an informal boycott of Barclays and Credit Suisse.
The newspaper quoted an unidentified banker as saying that "there is no public blacklisting, but behind-the-scenes skullduggery" that will stop the two banks from acquiring significant banking mandates in Abu Dhabi. Members of the Qatari royal family have taken large stakes in Deutsche Bank, which is likely in the same boat as the other two.
It doesn't help that the blockade ensued during a period of economic downturn, as oil prices have been low for some time now. Prices dropped from 100 dollars for a barrel in August 2014 to less than half that amount five months later, and things haven’t been the same since.
All else aside, a long drawn out crisis will not hurt the country’s pockets as much as it will its relations with its closest neighbours, whose ties run deeper than cold economics.