| Qatar | Feb 07, 2023
The Arabian Oryx, a hardy species of antelope, could not be a more appropriate national animal. Its durability in a challenging environment makes it a perfect metaphor for Qatar’s economy.
By World Bank estimates, Qatar will post respective growth of 4.8% and 4.9% for 2022 and 2023, respectively.
This not only bests the MENA’s 4.4% and 3.4%, but the EM’s 4.6% and 4.4%, Advanced Economies’ 3.8% and 2.3%, and the World’s 4.1% and 3.2%, respectively. Fitch forecasts the current account surplus stabilizing at 4% of GDP in 2022 on soaring visitor numbers thanks to…
…The Prize of 2023.
On December 2, 2010, FIFA made history by declaring Qatar the host of the FIFA World Cup 2022, a first for the Middle East. And, as Qatar’s Minister of Commerce and Industry, Sheikh Mohammed bin Hamad bin Qassim Al-Thani told TBY, “It is estimated that the 2022 World Cup will attract more than 1 million visitors, [with] international tourism revenues [of] QAR67 billion in 2022, compared to QAR31 billion in 2021.” Qatar’s National Tourism Sector Strategy targets 5.6 million annual visitors.
Four-year Blockade ends at Al-Ula
Qatar’s darkest moment had came in June 2017, when Saudi Arabia, the UAE, Bahrain, and Egypt, charging Doha with endorsing terrorism, agreed upon a total economic blockade of land, sea, and air.
Fast forward to January 5, when at the 41st GCC Summit in the Saudi Arabian city of Al-Ula, those same nations voted to restore relations. This opened the floodgates to investors keen to ride ascent of Qatar’s diversifying economy.
Hydrocarbons are far from being consigned to the dustbin of history. According to the World Bank’s GCC Economic Update report, Qatar is set to expand its hydrocarbon stake with the operation of its North Field projects, a multi-billion dollar undertaking on a historic scale that will boost annual LNG production capacity from 77 million metric tons to 126 million tons by 2027.
And meanwhile, being the world’s preeminent exporter of liquid natural gas, the fallout of war in Ukraine and economic sanctions on the commodity markets has worked to Doha’s advantage.
A Shot in the Arm
The minister notes that when COVID-19 brought global lockdown economic measures included, “a QAR75-billion stimulus package for the private sector, exempting food and medical commodities from customs duties for six months, [while] sparing industrial projects from rent […] and electricity fees for a period of nine months.”
In consequence, GDP rose around 4% in 2Q2021. “The real gross value added (GVA) of the oil sector rose 0.7% in the second quarter of 2021, in parallel with a significant rise of 6.2% in the contribution of non-oil activities.”
The IMF’s 2022 Article IV Mission to Qatar in March notes diligent banking supervision, as well as liquidity in the banking system sufficient to prop-up economic activity, while a “balanced and growth-friendly fiscal consolidation strategy could help to achieve […] diversification,” all conducive to building a “knowledge-based, stronger, more inclusive, and greener economy.”
A Climate for Diversification
Even a cursory glance confirms the aggressive diversification drive of Vision 2030. And just a few stats reveal the conducive circumstances enabling it. Located between East and West, Qatar has ready access to a combined market of 2 billion people across 25 economies, within 3,000km, and with a combined GDP of USD6 trillion.
Additionally, the nation benefits from superb connectivity and logistical and digital infrastructure. As our fintech focus article lays out, Qatar actively champions start-ups to cement its status as a regional hi-tech innovation hub.
Through bodies such as the Ministry of Commerce and Industry (MOCI)—operating Qatar’s Manufacturing Strategy (2018-2022)—and the Public Works Authority (ASHGHAL), the state promotes diverse PPPs in core sectors such as construction, infrastructure, and tourism. A comprehensive roadmap for manufacturing industries to 2030 promotes in-country value (ICV).
Qatar also calculates annual import substitution potential of around USD30 million. And thanks to MOCI’s long-term forecasting program, “manufacturers will efficiently utilize local talent to build durable and competitive companies.”
Manufacturing industries’ contribution to GDP climbed 1.4% to 8.67% in 1H2021, from 7.3% YoY. Annual export potential to MENA, Africa, Central Asia, and Europe is about USD28 billion.
“In recent years, Qatar’s non-oil sector has continued to grow, as its contribution to GDP rose from 52% in 2018 to about 66% by end-2020 [marking a] 26% increase, and contributing about QAR102 billion,” according to the minister, dwarfing QAR60 billion as of 4Q2020.
Qatar is excelling in advanced manufacturing, with a skilled workforce engaged in, among others, aerospace additives and medical consumables and device parts. Medical consumables spell potential as Qatar’s affluent population accounts for a USD1,700 per capita healthcare spend, high among MENA, the accessible healthcare markets of which also have high per capita healthcare spend (the UAE at USD1,800, Kuwait at USD1,700, and KSA at USD1,500).
In 2019, Qatar earned regional plaudits by beating four-time Asian Cup champions Japan 3-1 in the final. The global prestige from hosting the World Cup, then, stands to springboard this competitive economy to fresh heights.