Gulf rift: Economic impacts on Qatar - Emirates24|7

Gulf rift: Economic impacts on Qatar

The diplomatic rift in the region could have a serious impact on Qatar’s economy, particularly Qatar Airways, which can no longer fly to some of the Middle East’s biggest markets after the UAE, Saudi Arabia, Bharain, Egypt, Yemen and many other countries severed ties with Doha, accusing it of supporting terrorism.
 
Qatar’s stock market plunged recently, and may fall further after the Qatari Riyal dropped to an 11-year low against the dollar in the market - a sign of capital outflows - and Standard & Poor's downgraded Qatar's debt because of the diplomatic rift in the Gulf.
 
Meanwhile, prices of Qatari credit default swaps (CDS), used to insure against the risk of a sovereign debt default, rose sharply earlier today after the country's credit rating was downgraded because of the current situation.
 
The five-year CDS were at 89 points, the highest level since early December last year, compared to 80 late on Wednesday.
 
Standard & Poor's also cut its long-term rating of Qatar by one notch late on Wednesday to AA- from AA and put the rating on CreditWatch with negative implications, meaning there was a significant chance of a further downgrade.
 
Qatari CDS now imply a default probability of 6.0 percent in the next five years.
 
Arab states could impose an embargo on Qatar if it does not change course regarding its support of "extremism" and "destructive policies" in the region, UAE Minister of State for Foreign Affairs Anwar Gargash said on Wednesday.

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