Qatar: Deflationary Psychology Cuts into Housing Prices

Even though the small Arab nation of Qatar has large gas reserves, it's not immune to financial challenges.

In 2016, Qatar grappled with losses in its sovereign wealth fund. In 2017, the peninsular Gulf state is seeing a decline in housing prices.

Let's start with what EWI's June 2017 Financial Forecast had to say:

At the current juncture, Forbes notes that [soverign wealth] funds are becoming an “increasingly common sight around the world,” particularly in the Middle East where “oil-rich governments” need them to help “deal with their budget deficits.” The value of listed equities held by the world’s largest funds is $2.64 trillion, which is down 13% from the end of last year. Qatar’s sovereign wealth fund, the world’s ninth largest, is emblematic. Due to recent portfolio losses as well as the slump in oil prices, it will stop buying “trophy assets” such as Harrods and the Shard office tower in London.

And, this excerpt from an Oct. 14 Reuters article reveals what Qatar is dealing with today:

Qatar’s consumer price deflation deepened in September as a downturn in the real estate market deepened because of economic sanctions imposed by other Arab states.

Consumer prices fell 0.5 percent from a year earlier last month, after a 0.4 percent drop in August that was the first fall since at least early 2015, when the current data series began.

Housing and utility prices sank 4.7 percent from a year ago in September, their biggest drop for at least several years, and fell 0.7 percent from the previous month. In August, prices had slipped 4.0 percent from a year earlier.

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