Sanctions imposed by three Arabian Gulf states and Egypt slashed Qatar’s imports by more than a third in June while exports excluding its vital shipments of liquefied natural gas (LNG) were also disrupted, official data showed yesterday.
Imports shrank 40 per cent year-on-year and 37.9 per cent from the previous month to 5.87 billion riyals (Dh6.16bn), the ministry of development, planning and statistics figures showed, according to Reuters.
In May, imports fell just 0.3 per cent year-on-year.
Saudi Arabia, the UAE, Bahrain and Egypt cut diplomatic and transport ties with Qatar on June 5, accusing Doha of supporting terrorism, which it denies.
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Read our essential backgrounder on the Gulf dispute here: Qatar crisis: What you need to know
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The closure of the Saudi border, over which much of Qatar’s imports of food, dairy products and construction materials came, as well as a halt to shipping services from the UAE, delayed shipments for some days as Doha arranged other routes through centres such as Oman.
Now that alternate shipping routes and suppliers have been arranged, analysts believe Qatar can function fairly well even if the sanctions continue, and still expect it to be one of the Gulf’s best-performing economies this year.
The ministry’s figures suggested Qatar’s exports of LNG – the key to its financial health – were not hurt last month.
Last month’s exports of petroleum gases and other gaseous hydrocarbons climbed 15.8 per cent from a year earlier to 11.88bn riyals. They rose 21.6 per cent in May.
However, exports of petroleum oils including crude oil fell 22.4 per cent after rising 8.3 per cent in May. Non-petroleum exports fell 15.1 per cent.
Separately, some international banks are serving Qatar from London and New York instead of Dubai’s financial center as a regional dispute makes it harder to do business with clients in the gas-rich Gulf state, people familiar with the matter told Bloomberg News.
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Lenders that handled clients such as the Qatar Investment Authority and wealthy family offices out of the Dubai International Financial Centre are shifting coverage to other global financial hubs to avoid damaging relations with the UAE and Saudi Arabia, said the people, asking not to be identified because the matter is private.
As part of the restrictions imposed on Qatar, Emirates, Etihad Airways and flyDubai suspended flights to and from Qatar, meaning that Dubai-based bankers have to fly via Oman or Kuwait, adding hours to a flight that used to take less than 60 minutes.
Dubai became the Gulf region’s main banking hub after opening the DIFC in 2004 to attract international banks, asset managers and insurers with promises of zero taxes for 50 years.
Many bankers commute daily or weekly between the emirate and neighbouring Gulf states such as Qatar and Saudi Arabia to do business with local clients.
A number of Qatari clients are also saying they would prefer to work with bankers outside of the Gulf region rather than with bankers based in the DIFC, the people said.
Regional banking operations are also being impacted amid the crisis. Some lenders in the UAE, Saudi Arabia and Bahrain are said to have cut their exposure to Qatar amid concern of a widening of the blockade, while Qatari lenders are boosting interest rates on dollar deposits to shore up liquidity.