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GCC economies will get extra boost from World Cup: S&P

9 Nov 2022

Muscat – GCC economies, already benefiting from high hydrocarbon prices, are set to get an extra near-term boost from this month’s FIFA 2022 World Cup in Qatar, according to S&P Global Ratings.

S&P in a report said that more than 1.2mn fans are expected to attend the event, increasing Qatar’s population by about 1.5 times.

‘This paves the way for Qatar to enjoy potential near-term economic gains but also highlights the logistical challenges of managing the event, which will likely lead to positive spillover effects for the rest of the GCC,’ the rating agency said.

S&P anticipates that neighbouring GCC countries will host large numbers of fans, benefiting their aviation and tourism sectors.

‘The GCC’s official accommodation portal prioritises ticket holders. Visitors arriving in Qatar without match tickets could struggle to find a room and instead opt to stay in a neighbouring country. Meanwhile, accommodation prices in Qatar have soared, perhaps making it more economical for some fans to stay elsewhere and use the multiple shuttle flights to Doha from the wider GCC. That said, accommodation prices have increased in the GCC more broadly to reflect the increased demand,’ the rating agency said.

S&P expects Dubai to be the main beneficiary outside of Qatar, given its geographical proximity and its already well-established tourism offering, airline connections, and multiple-entry tourist visas for World Cup ticket holders.

According to S&P, Qatar’s hospitality, residential real estate, retail, and telecoms sectors will reap tangible benefits from the World Cup. The rating agency, however, foresees a post-World Cup slowdown in economic activity in Qatar.

‘We expect the direct impact of the World Cup to be positive but mostly short-lived, not resulting in any specific change to our medium-term view of Qatar’s economic growth outlook,’ it said.

‘Oversupply in the hospitality and real estate sectors could somewhat moderate their performance, although we don’t expect this to materially affect banking sector asset quality,’ S&P added.

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