11th June 2017
In an unprecedented move Saudi Arabia, UAE, Bahrain, and Egypt cut diplomatic ties with Qatar on the 5th June 2017.
Qatar is accused of supporting terror groups and backing groups that undermine political stability in the region.
The economic implication for Qatar is immediate and could be significant. The overall uncertainty will have an impact that extends beyond Qatar. If it drags out for a long period of time, it will be more of a GCC-wide problem as investors need stability and transparency.
Qatar is one of the richest countries in the world and also considered to have a stable and healthy macroeconomic environment according to the World Economic Forum. The country also has large investments through its sovereign wealth fund, in cities like London, Paris and New York. Qatar is the world’s biggest liquefied natural gas producer and buyers are generally not Arab states.
At present the socio-economic impact is hitting some sectors hard. Qatar is a huge import country, especially for perishable goods and is dependent on the overland routes from Saudi Arabia and the port of Jebel Ali in Dubai. The other is the construction sector, a key driver of the Qatari economy which is also dependent on overland routes for supplies. This will have an inflationary effect as the cost of goods will increase. There will also be an impact on foreign trade and the cost of doing business in Qatar.
To learn more about how this crisis will impact your business, you can contact MGI Middle East & North Africa Area members HERE