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Tribune News Network
Doha
The Saudi-led economic blockade seems to have helped Qatar diversify, leaving the country in a better shape than before, London-based Financial Times (FT) newspaper said on Thursday.
"Compared with how things might have been, this has been a good year for Qatari banks. The ructions of the past year may even have left the country's economy and, as a result its banking sector, is in better shape than before," the report said.
While the siege of Qatar in June 2017 resulted in withdrawal of deposits from the blockading countries, the report said, the government stepped in and a flood of public sector deposits outweighed the non-resident withdrawals by a factor of 2.5.
The result was that, in spite of the funding crunch, the spread between what banks paid depositors and what they charged borrowers improved by 41 basis points during 2017, according to analysts at HSBC.
By June this year, the pressure eased further, as non-resident deposits recovered to QR150 billion from the low of QR137 billion at the end of 2017, according to Qatar Central Bank. Altogether, about $9bn in foreign funding has returned, Fitch Ratings said.
The sudden stop, not only of non-resident deposits but also of goods from elsewhere in the Gulf, led to an urgent drive towards self-sufficiency in goods that otherwise might never have been produced in Qatar, the FT report said.
The country even airlifted cows to secure milk supplies."Qatar has been pretty successful in managing the impact of the embargo," the newspaper quoted Redmond Ramsdale, head of GCC bank ratings at Fitch Ratings, as saying.
"There has certainly been quite a push to self-sustainability. This has fed through to the banking sector as banks expanded their lending into new, non-hydrocarbon sectors of the economy. The blockade could turn out to be beneficial," Ramsdale said, adding,"From what we are hearing from the banks, there has been quite good diversification into other industries."
Moreover, oil prices began to recover almost immediately after the blockade was imposed. Brent crude has risen from about $45 a barrel in June last year to more than $85 a barrel today. This is comfortably above the 'break-even' price at which the government budget is in balance, which Fitch estimates at about $64 a barrel this year.
