World Economy

Qatar Promoting Private Sector as Sanctions Bite

Qatar Promoting Private Sector as Sanctions BiteQatar Promoting Private Sector as Sanctions Bite

Qatar’s government announced measures to help private sector businesses after its economy was hurt by sanctions imposed by other Arab states.

Prime Minister Sheikh Abdullah bin Nasser bin Khalifa Al-Thani decided to cut rents paid by companies in Qatar’s logistics zones in half during 2018 and 2019, Reuters quoted the official news agency QNA as saying.

New investors in the zones will be completely exempt from paying rents for a year if they obtain building permits by certain deadlines. Qatar Development Bank, a state-founded body which lends to firms, will postpone receiving loan installments for up to six months to facilitate industrial sector projects.

Sheikh Abdullah also told all ministries and government departments to increase their procurement of local products to 100% from 30%, if the local products meet necessary specifications and the purchases obey tender rules.

Qatar’s economy expanded just 0.6% from a year earlier in the April-June quarter, its slowest growth since the 2009-2010 global financial crisis, after Saudi Arabia, the United Arab Emirates, Bahrain and Egypt cut diplomatic and transport ties on June 5.

The four states accuse Doha of supporting terrorism, which Doha denies. The sanctions triggered a pull-out of deposits by Persian Gulf Arab states from Qatari banks, deepened a slump in real estate prices and caused a plunge of 18% in the stock market.

Meanwhile, Qatar National Bank in its latest report said: Qatar’s economy remains one of the strongest in the Middle East and North Africa region despite the blockade by some neighboring countries.

QNB said hydrocarbon exports have continued uninterrupted, new trade routes have been established, and the authorities are eager to attain a higher degree of economic self-sufficiency.

While the blockade initially disrupted some economic activity, its impact has dissipated, QNB said.

The blockade has impacted two main sectors of the economy. The first and most direct impact has been through trade, QNB said. In the immediate aftermath of the blockade, imports declined in June and remained subdued in July.

But by August, according to the latest trade data available, imports rebounded 40%, almost returning to their pre-blockade level and reflecting the quick adjustment in finding new sources of imports and establishing new trade routes. The recent opening of Hamad port, already one of the largest ports in the region, has been critical to supporting imports through the blockade.

The banking sector is the second sector affected, QNB said. Uncertainty in the immediate aftermath of the blockade triggered some deposit outflows from Qatar’s banking sector.

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