Despite the torrent of reports attesting to the non-impact of the Saudi Arabia-led diplomatic boycott of Doha, new estimates by Bloomberg’s economic survey predict that 2017 will be Qatar’s slowest year of GDP growth since 1995.
A previous study in June forecasted 3.1 percent and 3.2 percent growth for this year and next, respectively. New figures reduce those numbers to 2.5 percent for 2017 and 3.2 percent for 2018. The deficit figures jump to 5.1 percent for the current period, compared to previous estimates at 4.6 percent.
The current feud between Gulf monarchies began on June 5th, when Saudi Arabia expressed its indignation at an insubordinate Qatar.
Energy interests, most notably Doha’s shared custody of the South Pars gas field – the largest of its kind – prevent Qatar from cutting relations with Shiite Iran, the Sunni Saudi government’s main rival in the Middle East.
“Even before the diplomatic crisis with regional powers, it looked like Qatar’s non-energy economy would slow,” William Jackson, of Capital Economics told World Oil. “The early signs are that the sanctions dealt a damaging blow to Qatar’s economy in June. The impact appears to be temporary, but it will still result in weaker growth."
To be clear, Qatari exports of natural gas have not been affected by the diplomatic row. Related: Eclipse: What Happens If The World’s Giant Solar Farms Go Offline?
The biggest casualty has been GCC-funded projects, namely food-processing and port facilities, that now face an uncertain future.
“The illegal actions of our neighbors have been the catalyst for us to accelerate our economic plans and renew our commitment to diversification and sustained growth,” said Sheikh Tamim bih Hamid at Thani. “We fully expect to see a strong return of the Qatari economy this year and growth over the years to come.”
Qatar Petroleum also guarantees an increase in oil equivalent output topping one million barrels per day between the next five to seven years.
Doha’s unbeatable diplomatic flexibility plays a large role in carving out its niche in the region. The variety in its alliances will prove its immunity from the disciplinary tendencies of Saudi Arabia over the next 12 months.
"We expect the disruptive impact of the boycott to have evaporated by next year," said Farouk Soussa of Citigroup Middle East. "Trade routes will have been fully reconfigured, confidence will have been restored, building will recommence -- all possibly against a backdrop of a continued boycott, but one that the economy has adapted to."
Though the extent of Qatar’s economic expansion sees new limits, it still outpaces its former GCC allies. It is ahead of Saudi Arabia by 0.5 percent and the United Arab Emirates by two percent, the latest surveys say. And that is a problem for the GCC, especially for Saudi Arabia.
As Hajj season approaches, Doha continues to deny any efforts to block any Muslims’ timely arrival in Mecca or Medina. Qatar’s Civil Aviation Authority issued a statement on Monday that denied its intent to block Saudi Arabian planes from landing or departing from its airports.
To be fair, the KSA has done the same. Recently, Riyadh reopened its lander border to allow Qataris to enter the Islamic holy lands, and offered other citizens a flight into the country.
Even plans for World Cup 2022 in Qatar’s desert heat seem to remain undisturbed Related: BHP Makes ‘Safe’ Bet On Copper As Prices Hit 2-Year High
According to Hassan Al-Thawadi, Secretary General of the Supreme Committee for Delivery and Legacy, the blockade has caused “an inconvenience” in delivering on its soccer field promises. Still, “progress is being made” and the predetermined schedule has yet to see adjustments.
Projections for economic growth are consistently in flux. Whether or not Qatar meets its 3.1 percent growth rate this year is a factor of will power, bureaucratic know-how and international diplomacy, especially when a country has lost its major regional allies. So far, Doha’s resilience sees no foreseeable cracks.
By Zainab Calcuttawala for Oilprice.com
More Top Reads From Oilprice.com:
- Blockchain Tech Could Disrupt The Oil Industry
- Libya’s Biggest Oil Field Shut Down As Tensions Rise
- Colombia Looks At Shale As Oil Reserves Plunge