The FIFA World Cup 2022 in Qatar is all set to give a further boost to Gulf Cooperation Council (GCC) economies, which are already benefiting from high oil prices.
More than 1.2 million fans are expected to attend the event, increasing Qatar’s population by about 1.5x. 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 spill-over effects for the rest of the GCC,” S&P Global said.
In its report entitled “World Cup Will Give an Additional Near-Term Boost to GCC,” Dubai will be one of the major beneficiaries outside of Qatar, given its geographical proximity, a well-established tourism offering, flight connections and multiple-entry tourist visas for World Cup ticket holders.
In May, Dubai carrier flydubai said it will offer up to 30 daily return flights from Dubai World Central (DWC) to Doha during the tournament. Meanwhile, Air Arabia will be operating 14 shuttle flights daily from Sharjah to Doha.
The direct impact of the tournament on Qatar will be positive but short-lived, and will not result in any change in the country’s economic outlook.
“We estimate real GDP growth of 4.8% in 2022, a sharp increase on 2021 (1.5%), partly due to the additional economic activity associated with the World Cup, but also reflecting the ongoing recovery following the removal of Covid-19-related restrictions,” the report said.
The report also cautioned that Qatar may see a post-tournament lull in economic activity.
“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 said.
Boost for Dubai
The Emirate, already on a business and tourism overdrive because of Expo 2020, will be one of the major beneficiaries.
“Dubai Expo 2020 boosted the Emirate’s international visibility. As a result of the Expo, hotel room prices soared by 43% year-on-year from January to August 2022 and occupancy rates improved,” the report added.
S&P expects occupancy to remain high and hotel are expected to be “close to full capacity”. Dubai’s hotel capacity is three times that of Qatar.
Travel and aviation sectors will not be the only sectors benefiting from the tournament. The retail sector stands to gain, too. However, the demand may soften next year if “inflation accelerates” and if consumers become “more cautious about essential spending.”