Dubai: The economic and financial impact on Qatar of a nine-month Saudi-led blockade is fading, but some risks for the Gulf emirate remain, the International Monetary Fund has said.

Saudi Arabia, the United Arab Emirates, Bahrain and Egypt cut all diplomatic and trade ties with Qatar last June, closing its only land border and banning all flights to and from the emirate.

In a report released late Monday, the IMF said the effect of the blockade on economic activity in Qatar had been “transitory.”

Foreign financing and resident private sector deposits had fallen by $40 billion but that had been offset by cash injections by the central bank and the Qatar Investment Authority — the emirate’s sovereign wealth fund, it said.

Like other Gulf energy producers, Qatar has been hit by the slump in world oil and gas prices which has forced it to introduce austerity measures to balance its books.

A combination of the austerity measures and the blockade saw non-hydrocarbon growth fall to 4.0 per cent in 2017 from 5.6 per cent the previous year, the IMF said.

At 2.1 per cent gross domestic product growth in 2017 was only slightly down on the 2.2 per cent registered in 2016.

The budget deficit narrowed to 6.0 per cent of GDP compared with 9.2 per cent in 2016.

Although Qatar’s economy and banking and financial systems remain sound, there are still some risks, the IMF said.

“The main risks relate to the possibility of lower hydrocarbon prices, the implementation of planned fiscal measures and uncertainty associated with the lingering impact of the diplomatic rift.”

An escalation of the rift with Saudi Arabia and its allies could adversely affect external funding and growth, the IMF warned, adding that the banking system had to adjust to a new funding model.