The International Monetary Fund said Wednesday that transportation and food costs in Qatar have "edged up" due to a diplomatic rift that led four Arab countries to cut ties with the small Gulf state.
An IMF team visited the capital, Doha, this week, saying in a statement that Qatar's government was able to soften the immediate impact of trade disruptions, but that some costs have gone up as a result of delays caused by rerouting trade. Non-oil growth is projected to shrink by 1 percent to 4.6 percent this year.
In June, Saudi Arabia, the United Arab Emirates, Bahrain and Egypt cut diplomatic and transport links with Qatar. Saudi Arabia also sealed Qatar's only land border, a major conduit for imports.
Qatar turned to other exporters like Turkey, Iran and Morocco to fill gaps in its food imports and the construction material needed to build infrastructure for soccer's World Cup in 2022, set to take place there. Qatar also rerouted its shipments through ports in Oman after the UAE blocked Qatar-bound shipments from using its national waters.
The IMF said Qatar's banking sector remains sound and that the impact was mitigated by liquidity injections by the Qatar Central Bank and increased public sector deposits. The international lender said Qatar is prepared for any withdrawal of non-resident deposits.
The four countries accuse Qatar of sponsoring terrorism and backing extremist groups. Qatar denies the accusations and says the moves are aimed at pressuring the country to fall in lockstep with policies formulated in Riyadh and Abu Dhabi.
The IMF warned the rift could have a wider impact across the Gulf Cooperation Council, which consists of Qatar, Saudi Arabia, the UAE, Bahrain, Kuwait and Oman.
"Over the longer term, the diplomatic rift could weaken confidence and reduce investment and growth, both in Qatar and possibly in other GCC countries as well," the statement said.