'Best stimulus': UAE-Qatar trade restart to boost regional investments

Dubai - Real estate, infrastructure likely to stand out as biggest beneficiaries

The UAE’s decision to resume trade relations with Qatar has been received with great optimism among the business community here, as the historic deal is poised to see resumption of previous investment and trade opportunities between nations.

Of particular importance will be the reopening of Saudi and Emirati airspace to Qatar ahead of the 2022 Fifa World Cup, which Qatar is hosting. The event is expected to draw more than one million football fans with majority of travellers coming from the East likely to use Dubai as a major layover and travel hub.

Dr Azad Moopen, founder chairman and managing director of Aster DM Healthcare, said the Al Ula accord is the “best new year present” the Rulers of the GCC countries have given.

“Apart from strengthening the fraternity between the member countries, this will help to usher in peace and prosperity in the region. This will also provide significant economic boost and pave the way for strengthening trade across multiple sectors. With Expo 2020 and the Fifa World Cup in the horizon, this will act as a significant stimulus towards tourism development in the region.”

Dr Dhananjay Datar, chairman and managing director of Al Adil Trading, said the move is a welcome relief for those who have been having transborder business relationships.

“We are bound to see strengthened activities in retail, logistics and cargo operations. Overall this is a major step, especially in the current situation. The resolution of the dispute will not only boost bilateral relationships but will also lead to diverse opportunities that have far-reaching and positive results. The impact will be felt on various aspects of the economy, right from creation of new job opportunities to enhanced investments in diverse areas. This landmark decision shows the far-sighted vision of the leaders. The economy will show robust growth on account of enhanced trade. The ripple effect will be felt across the region and this will boost growth.”

Qatar’s total trade with the UAE stood at $3.5 billion just before the year the embargo was imposed. On the tourism front, the UAE, along with its Gulf neighbours, have contributed to majority of tourist inflow with a total of 45 per cent of the estimated tourist population.

“Going ahead, the UAE real estate and infrastructure sector will likely stand out to be the biggest beneficiary of this as Qatar, a major natural gas producer, will likely use the UAE’s geostrategic leverage to further gain access to markets. Going ahead, should things normalise further, we could likely see incremental trade growth of 10 per cent annually between the 2 countries,” said Bal Krishen, chairman of Century Financial.

Qatar’s economy will grow three per cent as the easing of a three-year-old regional dispute will help trade, tourism and logistics, Standard Chartered said, revising its previous 2.1 per cent growth estimate.

“We see the lifting of restrictions on trade and travel on Qatar as adding impetus to the ongoing recovery in trade, tourism and logistics,” Standard Chartered said in a recent note.

It said the UAE lifting restrictions on trade and travel to Qatar could also help the UAE’s trade recovery, “possibly leading to less trade and transit volume via Oman’s port and airport,” after Oman benefited from the re-routing of some trade during the embargo.

Another benefit could be a convergence in Qatar’s onshore and offshore spot currency rates, as foreign liquidity stands to benefit from the lifting of the embargo, it said.

The bank’s revised growth forecast is higher than the 2.2 per cent forecast Qatar gave last month in its 2021 budget.

“Regionally, the boost to consumer and investor sentiment and lower perceived geopolitical risk may contribute positively to economic outcomes, particularly ahead of significant events such as Expo 2020, set to be hosted by Dubai in October 2021, and the 2022 Fifa World Cup in Doha,” it said.

UAE industry applauds

Atif Rahman, director and partner of Danube Properties, said the move is a "great decision" and "the beginning of the new era in the GCC and Arab world leading to unprecedented economic growth".

"I salute the leaders for this great move that will boost regional stability. The socio-political and economic impact of such positive news goes beyond cross-border trade; I strongly believe that the Arab World is one of the strongest global force and the unity between the Arab nations reinforces that strength. From leaders to liquidity to resource to infrastructure, the future belongs to the Arab world."

Faizal Kottikollon, chairman of KEF Holdings, said the reopening of UAE-Qatar borders comes at a very crucial time when the economies of the Gulf countries are recovering from the Covid-19 pandemic and looking forward to economic growth.

"Not only it will help cross-border trade, travel and tourism, but we also expect cross-border investment to pick-up. If everything works out well, the economies of the GCC countries will grow faster than expected due to the re-opening of the borders.I take the opportunity to thank our pragmatic and visionary leaders for facilitating this."

Leena Parwani, founder and CEO of LPH Financial Services, believes the reopening will usher in a new era in economic cooperation as cross-border trade and investment in the UAE is expected to go up in the coming months and years.

"We expect all economic sectors to benefit from investment and trade. This is a very welcome development and it is happening when we are coming out of a major pandemic. We look forward to greater mobility of people, goods and services and look forward to an exciting time ahead."

Gabriel Abed, co-founder of Digital Asset Capital Management, says that any opportunity where two countries can trade with each other is a good thing for the people and businesses of those countries.

"It is just simply better mathematics when you foster collaboration as the result is more fruitful and resilient economies. The Middle Eastern region can greatly benefit from unified trade between members nations and this appears to be a step in that direction."

— sandhya@khaleejtimes.com