Economists: World Cup loss wouldn’t dent Qatar economy

Although there were impacts on Qatar’s immediate financial outlook following claims in a British newspaper over alleged bribery in its winning bid to host the 2022 World Cup, analysts say losing the tournament wouldn’t necessarily hurt the Gulf country’s economy in the long-term.

 

The Qatari stock market QSI fell 1.1 percent on Monday after the UK’s Sunday Times reported that former Qatari Fifa executive Mohamed bin Hammam had paid approximately US$5 million to sway FIFA officials to vote for Qatar in the run-up to a vote on the hosting in December 2010.

 

Meanwhile, on Thursday The National reported that EFG-Hermes Bank had downgraded its assessment of Qatari stocks, citing “weak” recent earnings, slowing credit growth along with the risk of the World Cup not being staged in Qatar.

 

FIFA vice-president Jim Boyce has called for a re-run of the bidding process if an independent investigation concludes that Qatar is guilty of breaking FIFA’s code of ethics, with some economists predicting that this would have a negative impact on the country’s infrastructure and diversification plans.

 

“If you take away the event there’s an increased likelihood that infrastructure projects may be scaled down or postponed,” said Khatija Haque, the head of Mena research at Emirates NBD, told The National.  

 

“The impact on the real economy would be negative as non-oil growth would be lower than expected,” he added,

 

However, other analysts say that a potential slowing of construction spending due to the loss of the World Cup would have little impact on the overall economy. 

 

John Sfakianakis, chief investment strategist at MASIC, a Riyadh-based investment firm told Reuters: "The question is, will it have a disastrous impact on the economy? No, I do not think so … The economy will continue to do well. It will lose a bit on the construction side, retail and hotels."

 

Some observers said losing the World Cup may actually have long-term positive effects.

 

The National quoted Farouk Soussa, chief economist of the Middle East at Citi Bank as saying, “We believe redirecting this capital to more fruitful endeavours would have long-term benefits for the economy."

 

Qatar has denied any wrongdoing and has distanced Hammam from having any role in the bid process.

 

In Qatar, fund managers said that while some stock investors were concerned by allegations around the World Cup, few thought that Qatar would lose the event.

 

"There is no reason to fear any cancellation - it is unlikely that would happen and if it does, companies will be protected by the terms of their contracts," said a Qatar-based construction company executive said to Reuters.