Population 1.839 million
GDP 184.566 US$ billion
@rating
country
Business climate
assessment
| 2010 | 2011 | 2012(e) | 2013(f) | |
|---|---|---|---|---|
|
GDP growth (%)
|
17 |
15 |
6 |
5.5 |
|
Inflation (yearly average) (%)
|
-2.5 |
2 |
2 |
3 |
|
Budget balance (% GDP)
|
11.2 |
8.5 |
7 |
4.8 |
|
Current account balance (% GDP)
|
19.5 |
30 |
25 |
22 |
|
Public debt (% GDP)
|
31 |
32 |
33 |
34 |
| (e) Estimate (f) Forecast | ||||
STRENGTHS
- World’s third largest gas reserves and world’s leading exporter of liquefied natural gas (LNG)
- Diversification well under way (industry, finance, tourism)
- Net external creditor position, due to extensive assets abroad (mainly via the Qatar Investment Authority sovereign fund)
- Stability of the Sheik Hamad bin Khalifa al-Thani regime and desire to play an international diplomatic role
WEAKNESSES
- Dependence on hydrocarbon sector (two thirds of fiscal revenues and over 90% of exports)
- Uncertainty over future price of natural gas due to the shale gas boom
- Dependence on foreign workforce
Risk assessment
Return to less dynamic growth after several exceptional years
Qatar posted exceptional growth rates for several years thanks to new natural gas liquefaction mega units, a gas-to-liquids factory and increased oil production.
In 2013 growth will continue the deceleration begun in 2012, while still remaining the strongest in the region. Activity in the dominant hydrocarbon sector will remain steady despite the moratorium on exploring the main gas field (North Field) until 2015 at least. In the non-hydrocarbon sector, growth is likely to be spurred by ongoing efforts to diversify the economy, especially in petrochemicals. And, large-scale infrastructure is under construction or planned – under the National Development Strategy (2011-2016) and also with a view to the 2022 Football World Cup – as the new Doha airport, a metro, a deep-water port and also, in the future, a rail network linking some Gulf countries and a bridge to Bahrain.
For the future, there are questions surrounding the impact of the surge in shale gas on natural gas prices. In current conditions, however, Qatar’s economy is enjoying increased demand for LNG from developed countries (Japan, South Korea, Germany, United Kingdom) and emerging countries alike, especially in Asia. Furthermore, long-term export contracts covering and its dominant market position, together with low production costs, will no doubt allow the country to maintain its export volumes and respectable margins.
Substantial twin surpluses that help reduce the burden of external debt
Hydrocarbons, which represent two thirds of fiscal revenues, are expected to help maintain a solid though smaller fiscal surplus in 2013, due to the sharp increase in operating expenses – public sector salaries and pensions – and investment – education, health, infrastructures.
As a source of over 90% of foreign currency earnings, hydrocarbon exports will doubtless make it possible to maintain a very substantial current account surplus, even if it is being eroded. Their growth will more than offset the rise in imports of consumer and capital goods – linked mainly to the Football World Cup – as well as capital outflows in the form of profit repatriation by foreign firms and transfers by expatriate workers.
Foreign debt has grown rapidly since 2008, with development projects financed by international loans. However, as these are productive investments, the debt burden will decline due to surplus growth and exports. In addition, the country has substantial assets abroad (valued at $210bn in 2012), which makes it a net external creditor.
A solid banking sector but room for improvement in the business environment
With a capital ratio well above Basel II norms, the banking sector is well capitalised, liquid and profitable, with a low rate of non-performing loans. Since the Dubai World financial crisis in 2009, the commercial banks have been more selective in granting loans, whose growth, nonetheless, has benefited the state and the public sector. This could prompt greater transparency on the part of private companies in a business environment where there is room for improvement and marked in particular by considerable administrative obstacles and insufficient investment protection.
Political stability and international stature
The authorities are at pains to ensure that Qatari citizens benefit from the wealth of the emirate and the regional uprisings are therefore unlikely to occur in Qatar. The Emir al-Thani has nonetheless taken steps to retain the initiative, especially by planning the election in late 2013 of two thirds of the members of the Advisory Council (Majlis al-Shura), a measure stipulated in the Constitution of 2003 but to date not implemented.
Meanwhile, Qatar is seeking to increase its international standing thanks to its financial clout and the Al Jazeera television channel. The emirate will continue to play the role of regional mediator, with mixed results, as in Yemen – together with the Gulf Cooperation Council – or between Fatah and Hamas in Palestine in 2012. However, it also took on a stakeholder role in 2011, within the framework of NATO military action in Libya and in 2012 with its firm opposition to the Syrian government.
