The restoration of the Gulf Cooperation Council’s relationship with Qatar will improve cooperation but the damage done by the rift is likely to remain, says S & P.

Following the resolution of the dispute between Qatar and the other GCC states, S & P said political and economic cooperation will both improve, but the damage done to the three-year boycott, both real and perceived, will remain.

However, the agency foresees no ratings impact on the countries at present, saying they would remain as follows: Qatar (AA-/Stable/A-1+), Saudi Arabia (A-/Stable/A-2), Bahrain (B+/Stable/B), and Egypt (B/Stable/B). The UAE is not rated by the agency.

“In our view, the imposition of the boycott has undermined the perception of unity put forward by GCC leaders prior to the diplomatic rift. We believe that underlying differences in foreign policies will likely still weigh on relations among GCC countries, despite the formal reconciliation,” said S & P in RatingsDirect report . 

The resolution will however support improvement in the region’s broader business and investment environment, S & P said.

“In our view, Qatar's intraregional travel, tourism, and real estate sectors will benefit most, although the impact on bilateral trade could be marginal,” the report said. 

“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.”

The report said despite lackluster growth in still-low hydrocarbon prices, Qatar’s credit profile will remain resilient, supported by its wealthy economy and external net asset positions.

The resolution of the dispute between Qatar and its GCC neighbours was announced last week at a leaders’ summit held in Saudi Arabia. The opening of airspace and flights between the UAE and Qatar was also announced at the weekend.

(Writing by Imogen Lillywhite, editing by Daniel Luiz)

imogen.lillywhite@refinitiv.com

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