Qatar image would suffer more than economy if World Cup lost

Qatar’s sizzling growth would slow if it lost the right to host the 2022 World Cup soccer tournament, but the tiny country is so rich that the impact on its economy and financial markets would be much smaller than the blow to its reputation.

The Qatari stock market sank 1.1 percent on Monday, underperforming the region, after a British newspaper published what it said was evidence of corruption in Qatar’s successful bid to host the World Cup. Qatar and tournament organisers denied the allegations.

Plans to spend billions of dollars on building stadiums could be scrapped if the allegations eventually lead to a reversal of FIFA’s decision to award the World Cup to Qatar, which has a population of 2.1 million and no reason to build the venues solely for its own population.

Construction of related infrastructure, including road and rail links, could be slowed or put on hold, and real estate firms might suspend hotel projects involving thousands of rooms. Qatar would also lose the boost to tourism spending that it can expect during and after the tournament.

But the world’s top liquefied natural gas exporter is wealthy enough to handle such economic dislocation without long-term damage, and some analysts think it could even benefit from a slower pace of development.

“Not all of the planned infrastructure projects are World Cup-related – many are essential transport and logistics projects that would be needed even if there was no World Cup in Qatar,” said Khatija Haque, head of regional research at Emirates NBD, Dubai’s biggest bank.

“However, without the event providing a fixed deadline for delivery, some of these projects may be delayed or scaled down. This would have a negative impact on non-oil growth projections over the next few years, but could be positive for the budget.”

The economy minister said earlier this year that Qatar would invest around 664 billion riyals ($182 billion) on infrastructure projects, excluding the oil and gas sector, over the next five years – relative to the country’s size, one of the most ambitious construction sprees in the region’s history.

In its original bid to host the World Cup, Qatar proposed building or renovating 12 stadiums, though it said earlier this year it was reviewing the plan and the minimum possible number was eight.

Reuters