In terms of the deal struck between Saudi Arabia, the UAE, Bahrain and Egypt with Qatar, the size of the impact should “not be overstated”, according to leading economist Scott Livermore.
Relations between the countries took a giant step towards normalisation on Tuesday in the northwestern town of Al Ula in Saudi Arabia, with the signing of an accord at the Gulf Cooperation Council summit, ending a near three-and-a-half-year blockade against Qatar.
The four boycotting nations accused Doha of meddling in their internal affairs, supporting hardline Islamist groups and building ties with Iran. Qatar denied the charges.
Scott Livermore, ICAEW economic advisor and chief economist, Oxford Economics Middle East
Livermore, ICAEW economic advisor and chief economist, Oxford Economics Middle East, told Arabian Business: “Regarding the impact on the UAE, Saudi Arabia and Bahrain, it should be positive but the size of the impact should not be overstated. Rapprochement with Qatar will stimulate visitors and potentially investment from Qatar, as well as contribute to a more stable political environment in the Gulf which is positive its attractiveness to international investors.
“However, the gains will be relatively slow to accumulate, especially as the underlying reasons for the blockade – and hence for the tensions – have not been permanently resolved.”
In the year before the split, Qatar’s total trade with Saudi Arabia stood at around $1.7 billion, according to Bloomberg data. Qatar’s total trade with the UAE was $3.5bn.
In a research briefing, Livermore said the impact on the Qatari economy will be “significant”. In terms of international visitors, around 45 percent of overnight visitors to Qatar arrived from Bahrain, Egypt, Saudi and the UAE prior to the blockade, but by 2019 this had dropped by over 90 percent.
“In addition, flights to/from Qatar could not use the airspace of blockading countries, adding time and fuel costs to journeys to/from Qatar to other countries,” he said.
From a trade perspective, Livermore said an estimated 60 percent of imports to Qatar came from blockading countries. “This forced Qatar to seek direct trade routes, identify new suppliers or develop domestic sources. Qatar’s non-oil exports also lost access to key markets,” he added.
Rudolph Lohmeyer, partner, National Transformations Institute, Kearney Middle East told Arabian Business that the restoration of ties is “extremely good news” for the GCC and the region.
“For the GCC, it will mean renewed vitality, legitimacy and ultimately power,” he said, adding: “For the region as a whole, the breakthrough will hopefully prove to be a significant step towards deeper economic integration, which is in everyone’s strategic interest.”
“By facilitating cross-border flows of trade, investment, and ideas, the region can accelerate growth, attract higher levels of foreign direct investment, expand innovation, and increase global competitiveness by taking full advantage of its economic complementarities,” he said.
While Donna Benton, founder and chairman of Dubai-based The Benton Group, a corporation with a worldwide reach across various industries, including beauty, entertainment, fashion, hospitality, leisure, property, sports, technology and travel, told Arabian Business: “I do not expect a massive shift at this point in either direction, as many businesses are in the process of working through the challenges of the pandemic, but Qatar is certainly a lucrative location for expansion of businesses.”
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