Qatar looks to distance its economy from oil and gas and develop alternative economic sectors as growth in the energy sector slows down.
While the fossil fuels industry still dominates the country’s economy, contributing roughly 50 per cent of real GDP, the non-hydrocarbon sector is expanding at a rate of 11 per cent year-on-year, an economic report by the National Bank of Kuwait reveals.
As part of Qatar’s National Vision 2030, the country aims to utilise its natural resources in order to diversify its economy. “Converting natural assets (hydrocarbons) into financial wealth provides a means to invest in world-class infrastructure, build efficient delivery mechanisms for public services, create a highly skilled and productive labour force and support the development of entrepreneurship and innovation capabilities,” according to Qatar’s 2030 plan.
What’s more, winning the bid to host the 2022 FIFA World Cup will only further propel alternative sectors, such as infrastructure, real estate and hospitality.
However, while this vision may be considered a sensible macroeconomic strategy, Qatar’s government has been forced into taking such measures. Its ageing oil fields are undergoing a process of conservative management, and a suspension has been placed on further gas extraction in Qatar’s giant North Field; all of which imply that hydrocarbons will not hugely affect economic growth in the near future. To illustrate, the energy sector’s real growth has slowed from a high of 28.9 per cent in 2010 to 0.1 per cent in 2013, the NBK report reveals.
Which other sectors can Qatar rely on, then, to maintain its first place on the global ranking of GDP per capita? Namely, huge infrastructure investment projects have resulted, in Q1 of 2014, in a 20 per cent growth in the construction sector in real terms. Also, Qatar’s equity is experiencing a boom since the inclusion of the Qatar Exchange in the MSCI Emerging Markets Index.
As a result of these expansions, Qatar’s population of just over 2 million is expanding at a rate of 11.6 per cent a year, which will, in turn, certainly help boost the services sector. Currently, this industry contributes to 4.2 per cent of growth. However, with the rising prominence of Qatar Exchange, and in preparation for the 2022 World Cup, both financial and hospitality services are expected to experience a boom in the coming years.
Wednesday, July 30- 2014 @ 16:55 UAE local time (GMT+4) Replication or redistribution in whole or in part is expressly prohibited without the prior written consent of Mediaquest FZ LLC.