• Register

Qatar looks to diversify its economy away from hydrocarbon export reliance

Qatar: Wednesday, November 14 - 2012 @ 18:20

The recently released IMF World Economic Outlook projects that Qatar’s real GDP will grow 6.3% in 2012 – down from 14.1% in 2011, slowing down to 4.3% in 2013 as the hydrocarbon export boost begins to plateau. With oil prices forecast to remain above $100 per barrel the country’s current account balance is forecast to remain strong however, at 29.6% of GDP in 2012 and 26.8% in 2013.

“Looking ahead, the main issue facing Middle East oil exporters is how to take advantage of their current positive position to strengthen their resilience against oil price declines and diversify their economies to boost private-sector job creation,” Masood Ahmed, Director of the IMF’s Middle East and Central Asia Department said in a statement on the report’s release. “Fiscal policy could gradually shift to bolstering national savings, and countries could ease the pace of government spending, especially on expenditures that are hard to reverse, like public-sector hiring,” he added.

Qatar’s economic diversification into non-energy sectors is well underway, but the country nevertheless benefits from a significant financial buffer. Currently oil and gas still account for approximately 85% of export earnings and 70% of government income. A revenue source that is sustainable for the mid-to-long term as proven oil reserves account for 25 billion barrels (enough to continue at current output levels for at least the next 55 years), while proved natural gas reserves top a staggering 25 trillion cubic metres – 13% of the global total.

Qatar’s growth sectors

In 2008 Qatar published its Vision 2030, a roadmap of how the country would focus on four key areas of development; human, social, economic and environmental, in order to oversee the creation of a regional hub for high-level industrial activities and a modern, knowledge-based economy. The roadmap, which calls for the leveraging of the country’s hydrocarbon-created wealth to fund investment in infrastructure for these projects, is overseen by the not-for-profit Qatar Foundation.

The awarding of the 2022 FIFA World Cup has also provided a boost to the country’s infrastructure and construction market – and, by extension, laid the groundwork for positioning Qatar as a major global tourism and sporting event destination.

“The investment in the infrastructure projects [projected as over $200bn over the next 10 years] is a major source of Qatar’s economic diversification,” HE Yousef Hussain Kamal, Qatar’s Minister of Economy and Finance said in his opening address to the Mena Investment Management Forum in November. “The upcoming rail and metro projects, New Doha International airports and the Lusail City projects offer wide range of funding opportunities for the investors.”

Alongside its increased infrastructure spend, Qatar is expanding capacity in its petrochemical sector, with expectations that investment will top $25bn until 2020, allowing for the increased export of more complex products to the global market.

In addition, Qatar has set in place a series of regulatory and legislative programmes to reform its financial sector in order to attract more participation from foreign entities, as well as to encourage growth in the SME sector to provide a self-sustaining base for the local economy. The Qatar Financial Centre has also made progress in creating a niche identity as a global hub by including in its offerings specific focus on financial sectors such as the insurance and reinsurance markets.

Looking abroad, Qatar has been maximising its current account surplus to take advantage of reduced pricing for key investments such as real estate, banking, manufacturing and international brands in markets more directly affected by the financial downturn. The country’s foreign investments last year alone topped $6bn.

Apart from its stakes in France’s Total and the Anglo-Dutch Shell oil companies, Qatar – through the Qatar Investment Authority also has holds investments in a number of high-profile real estate, hospitality, manufacturing, sporting and retail brands overseas, such as Harrods and the Shard building in London, the Raffles Hotel Group, locations in New York and Paris, Volkswagen, Credit Suisse, and Xstrata.

Today's Top Stories

Posted by

Wednesday, November 14- 2012 @ 18:20 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.

AME Info Services

Business DirectoryVIEW ALL

Search by name

Search by industry

Browse alphabetically


Search for jobs

Latest Jobs