What is happening to Qatar-Gulf crisis?!
The effects of the Arab quartet’s boycott against Qatar on the country’s import levels are fading according to the latest report by BMI Research.
The report said that the illegal boycott, now in its fifth month, has facilitated continued growth in the construction and manufacturing segments.
The Fitch Group company forecast Qatar’s real GDP to expand by 1.9% this year and 2.5% in 2018, from an estimated 2.2% in 2016.
It said the ‘successful’ establishment of alternative supply chains following the GCC diplomatic crisis will prevent severe disruptions to activity in key non-hydrocarbon segments such as construction and manufacturing.
However, BMI noted hydrocarbon sector’s performance in Qatar will be weak in the second half of this year, a trend it expects to continue.
While gas production will see modest growth from late-2017 (when the first phase of the Barzan project comes online), any ‘substantial uptick’ in output may not happen before 2020.
Meanwhile, the construction sector, which grew by 15.3% year-on-year (y-o-y) in Q2, 2017, looks set to remain a key driver of growth as projects linked to the 2022 FIFA World Cup progress.
BMI continues to expect Qatar’s construction sector to grow by a strong 10.1% in 2018, and 11.6% annually on average in the five-year period between 2017 and 2021.
Given BMI’s expectation for the diplomatic crisis to be resolved within months (rather than years), and for hydrocarbon prices to gradually rise, it believes sentiment will improve significantly over 2018.