New York - A new Bloomberg survey sees the Saudi-led boycott of Qatar biting into growth this year. Economists have cut their GDP forecasts by just over half a percent and expect expansion of 2.5%. Qatar's economy will expand this year at the slowest pace since 1995, according to economists surveyed by Bloomberg this month, as the impact of a Saudi Arabia-led boycott is felt on trade and investor confidence. Economists now expect a budget deficit of 5.1 percent of GDP this year, up from 4.6 percent, while the forecast for inflation dropped to 2.2 percent from 2.5 percent. Saudi Arabia, the United Arab Emirates, Bahrain and Egypt cut diplomatic ties with Qatar on June 5, accusing Doha of destabilizing the region through its ties to Islamist extremists - a charge Qatar has repeatedly denied. Imports and foreign deposits have plummeted and interest rates soared, exacerbating a broader slowdown due to lower global energy prices. "Even before the diplomatic crisis with regional powers, it looked like Qatar's non-energy economy would slow," said William Jackson, senior economist for emerging markets at Capital Economics. "The early signs are that the sanctions dealt a damaging blow to Qatar's economy in June.
