UAE, Saudis may benefit more from reopening of Qatar border

Dubai - Analysts believe the reopening of borders will have limited impact on government revenue and overall fiscal performances across the GCC.

The reopening of borders with Qatar by three GCC countries and Egypt will have only limited immediate positive ramifications on the regional economy, according to analysts at two leading global rating agencies.

The UAE — especially Dubai — and Saudi Arabia may benefit more from the reopening of trade, tourism and investment channels with Qatar given their tourism and real estate sectors. “Nonetheless, these gains should be kept in perspective: Qatari tourists accounted for about one per cent of Dubai’s visitors before the border closure,” Moody’s Investor Service said.

Analysts believe, as such, the reopening of borders will have limited impact on government revenue and overall fiscal performances across the GCC.

“Qatar’s financial system could also benefit if lenders and depositors from the blockading GCC sovereigns return. The normalisation of relations could support renewed inflows of deposits and cross-border lending from the GCC, potentially reversing the decline witnessed since the dispute,” Thaddeus Best, Moody’s analyst, said.

S&P Global Ratings said the end of the boycott will support improvement in the region’s broader business and investment environment, while underlying differences in foreign policies will likely still weigh on relations among GCC countries.

“In our view, Qatar’s intraregional travel, tourism, and real estate sectors will benefit most, although the impact on bilateral trade could be marginal. Trade between member states is relatively limited given the almost uniform concentration of GCC member states’ exports on hydrocarbons and the lack of strong agriculture or manufacturing sectors in the region,” said Shokhrukh Temurov, primary credit analyst, S&P Global Ratings.