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Qatar is now the richest country in the Muslim world. Current GDP per capita registered a world record-breaking peak growth of 1,156% in the Seventies. This became quickly unsustainable and Qatar's current GDP per capita contracted 53% in the Eighties. But rising global oil demand helped current GDP per capita to expand 94% in the Nineties. Diversification is still a long-term issue for this over-exposed economy.
The organization has also invested in several expansion projects owing to annual profits of (estimated) US$2 billion. Qatar had the worlds fastest industrial production growth rate in 2010, rising by 27.1 percent from the previous year. This followed double-digit growth trends from the past two years.
Qatar operates with a trade surplus, however much of its revenues earned from exports are reinvested into imports that would help sustain Qatars rapidly growing economy. This includes machinery and transport equipment, food, and chemicals. The value of Qatars imports in 2010 was US$23.38 billion, with 14.43 percent of the imports coming from the US, 8.34 percent from Italy, 8.33 percent from South Korea, and 8.04 percent from Japan.
Qatars economy grew by 16% p.a., on average from 2006 to 2008. Then in 2009, real GDP growth rate slowed to 11%. But the economy bounced back with 18.7% growth in 2011, after 16.6% growth in 2010. In 2012, Qatars growth is expected to slow to around 6%, due to a self-imposed moratorium on new hydrocarbon projects still the GCCs highest growth rate.
In 2012, inflation is projected to be 4.1%, up from 1.2% in February 2012, according to Qatar Statistics Authority (QSA). Consumer prices fell by an average of 3.6% per year from 2009 to 2010, but from 2006 to 2008 annual inflation was 13.5%.
It could well be that the Qatari government is the luckiest government in the world. Sitting on the world's third largest natural gas reserves in the world, Qatar is the single largest supplier and exporter of liquefied natural gas (LNG), apart from being a significant oil producer.
"Qatar is one of the fastest growing economies in the world. Its LNG capacity will reach a peak of 77 million tons per year (mtpy) in 2011 compared to 30 mtpy in 2008, and less than 5 mpty in 1997. Hydrocarbon GDP grew at an average rate of about 11 percent between 1990 and 2009, while a non-hydrocarbon GDP grew at an average rate of 9.5 percent," says the IMF.
On the other side of its balance sheet, Qatar has few commitments. Of a population of 1.6 million, Qataris make up around 320,000, which makes it easy for the government to provide them free healthcare, education and subsidized living, and a GDP per capita of $74,400 - among the highest in the world. Of these roughly 72,000 Qataris are economically active. No wonder unlike their regional counterparts, Qataris are not out on the streets demanding political reforms.
The sterling GDP growth is expected to calm down somewhat with growth in 2010 estimated to be around 16% in 2010 and 18% in 2011, and a further easing to 6% by 2012, as the country's LNG production reaches its peak during that time.
To offset that slowdown, the country has also embarked on a $225-billion investment programme over the next five years, which includes $95-billion from the government, and assumes $107-billion in private non-hydrocarbon sector growth and $23 billion in the private sector hydrocarbon.
Of course, all the authorities' plans to invest in infrastructure, its people, its tourism and notable sports tourism and healthcare can not take away the fact that the economy rests solely on hydrocarbons - and is overwhelmingly dependent on its exports of oil and gas to the rest of the world.
Luckily for Qatar, the world's dependence on hydrocarbons remains intact and in fact, gas is the "fuel of choice" of the 21st century.
"A further expansion in LNG capacity, and activity in the non-hydrocarbon sectors will boost real GDP growth to 20 percent and further increase fiscal and external surpluses," says the IMF in a recent report.
"Continued growth in the manufacturing sector, a pickup in the construction sector, and sustained activity in financial and government services, transportation and communication will drive the non-hydrocarbon sector growth of 9.5 percent."
Missing will be the unbridled double-digit growth. However, at a projected 4-5 percent a year post-2012 real GDP growth will remain solid, and in nominal terms the economy will remain highly prosperous with national income conservatively projected to reach $213 billion by 2016 (the IMF projects nominal GDP of $224 billion by 2015) with an estimated per capita income of over $114,000.
"A key factor in the medium-term projections is the recognition that the contribution from the hydrocarbon sector to growth will drop off dramatically as the 20 year gas based investment program comes to an end and the last of the major projects come on stream in 2012," notes a Samba report. "This then leaves the nonhydrocarbon sector as the driver of future real GDP growth," says the Saudi bank.
The next wave of growth will depend on the $200-billion investment in the non-hydrocarbon sector and rest on stimulating projects such as the hosting of the 2022 FIFA Football World Cup.
Qatar's private sector has not shown much signs of robustness and remains beholden to government support. During the global financial crisis, Qatar stepped in to capitalize banks, support the stock market and merged entities. Not much has changed since the crisis to believe that the private sector will step in and lead growth. But in the five-year forecast, the NDS projects hydrocarbons contribution to be around 42% by 2016 from its current level of 51%. That means that nonhydrocarbon GDP will grow at 9% each year till 2010.
"The authorities are hoping that expanding services activities will be a major driver of the economy accounting for close to 40 percent of GDP by 2016, with an emphasis on transportation, communications, business and financial services," says Samba.
"Manufacturing activity is also projected to grow steadily in line with continued expansion in fertilizer, petrochemicals and metallurgy, accounting for 10 percent of GDP by 2016."
Conclusion:
With oil and gas prices expected to remain high over the long-term, Qatar's hydrocarbon growth remains robust. Qatar also needs lower oil prices than its regional counterparts to balance its books; indeed oil prices will have to fall to $40 a barrel for Qatar to start posting budget deficit from 2012 onwards.
QATAR
Submitted to:
Mrs. Yolanda D. Vistal
Submitted by:
Ilona Jean G. Brecilla Cyrus Rogie R. Batayan Ian Cezar O. Lopez Bsa 2-1