Over a month of boycott by Saudi Arabia, UAE, Bahrain and Egypt, Qatar is beginning to face the heat, a news report has revealed.
According to the Bloomberg report, from the outset, some analysts said the coalition was betting that a prolonged isolation would extract enough economic pain that would force Qatari leaders to offer concessions.
The Saudi-led alliance, that severed ties with Qatar, reinstated a list of 13 demands that must be met before talks to resolve the eight-week crisis could start. Moreover, fresh economic data highlight the impact of the unprecedented boycott on the Gulf nation.
Expensive trade routes
According to the report, Qatar’s isolation has forced the nation to open new, more expensive, trade routes to import food, building materials and equipment. Imports also dropped 40 percent compared with the same month a year ago.
“The disruption of trade routes will weigh on non-oil economic growth, which was already on a slowing trend,” Mohamed Abu Basha, a Cairo-based economist at EFG-Hermes, said.
“But even the new trade routes are likely to be more expensive than the older ones, which will affect growth and public finances.”
The sovereign wealth fund
Qatar still boasts one of the world’s largest sovereign wealth funds, whose holdings include stakes in companies such as Glencore Plc and real-estate landmarks such as the Shard in London. The boycott hasn’t affected its exports of liquefied natural gas.
Qatar’s benchmark stock index dropped 1 percent at the close in Doha, the most in the Middle East before the announcement in Bahrain, signaling investors were expecting the Saudi-led alliance to escalate, the report said.