Qatar: A Model of Sustained Growth

The Qatar’s Ministry of Development Planning and Statistics (MDP&S) forecasted that growth of real gross domestic product (GDP) during the current fiscal year would grow by 5.3 percent. Different Qatar’s official figures suggest that over the past six years, its economy grew over five times in size during 2002 to 2008, at an average annual rate of 31.6 percent from $US19.4 billion in 2002 to $US100.4 billion in 2008. Due to which Qatar represents a sustained model of macro-economic development.

Due to diversified but integrated policies initiatives, constant economic liberalization, robust service sector, and substantial growth in manufacturing and construction i.e. over 10 percent the Qatar’s macro-economy achieved 5.3 percent during 2013. According to Qatar central bank (December, 2013), its growth is expected to moderate to 4.5 percent in 2014. The balance of payments and fiscal surpluses would be remained healthy in the days to come.

The comparative study of the above, given tables show that over the past years Qatar’s economy has undergone a huge and unprecedented growth. The government of Qatar adopted a comprehensive strategy resulted in building a solid and diversified economic base meaning to decrease the dependence on oil and natural gas and stand against the fluctuations of world economy.

According to the latest World Economic Outlook (WEO) forecasts, growth in the region will pick up from 3.3 percent in 2013 to 4.4 percent in 2014. QNB Group forecasts somewhat higher growth of 4.5-5 percent in 2014, with Qatar leading the region in 2013 and 2014.

Diversification Policy
It diversification policy now pay the dividends. The sources of national income have been further increased. The economy’s production base has been widened. The healthy relationships between public-private sectors have been enhanced. Qatar also worked on preparing a favorable investment atmosphere to attract foreign capitals to invest in sustainable and comprehensive development projects, taking advantage of the country’s stability. It is one of the ideal destinations for FDIs & FPIs in the region.

Qatar Economic Insight report (December, 2013) indicates that manufacturing remained the fastest growing sector 12.5 percent boosted by production from the new Pearl gas-to-liquids (GTL) facilities. Construction is now booming, growing by 11.7 percent 6.3 percent in the first quarter alone an indicator that the Qatar’s infrastructure development programme is gathering steam. The acceleration in economic activity is expected to be driven by large infrastructure projects that are being implemented in Qatar including the $US35bn metro and railway project for which contracts have recently been awarded.

Trade & Hospitality Industry
Trade, restaurants and hotels grew 10.5 percent in the 12 months to March 2013, boosted by the influx of expatriates required to implement major infrastructure projects.

Financial Service
In addition to this, financial services benefited from the booming economy, growing at an annual rate of 10.5 percent 5.8 percent in the first quarter alone. Government and social services, together with electricity, gas and water, all grew in line with the additional demand from the growing population.

The key driver of growth will therefore continue to be the non-hydrocarbon sector at least until 2015, when the Barzan gas project is expected to start production. It is predicted that large fiscal and current account surpluses would provide Qatar with ample resources to invest in major infrastructure projects, pushing further the process of economic diversification into a manufacturing and services hub.

Global Competitiveness Report (2013-2014)
According to the Global Competitiveness Report 2013-2014 released by the World Economic Forum (WEF) Qatar has moved up to 13^th place in the overall rankings of 148 economies. Qatar tops the rankings In the Middle East and North Africa region.

The above table reaffirms Qatar position as the regional leader. Other factors that provided a good basis for heightening efficiency in the country include low levels of corruption, high efficiency of government institutions, and strong security.

MDP&S says that Qatar’s economy, with the highest per capita income in the world, is estimated to grow 6 percent during 2013 higher than the earlier 5.3 percent due to phenomenal increase in gas production revenues but growth will moderate to 4.6 percent in 2014. Inflationary pressures would be within control in 201 a moderate 3.5 percent.

Qatar National Bank Group (2013)
QNB Group (December, 2013) says that the productivity of the non-hydrocarbon sector could be worth more than half of the country’s GDP by 2015. Driven by mega infrastructure projects for the FIFA World Cup 2022 in an estimated $US200bn-plus spending drive, the non-oil segment is slated to grow from 42 percent in 2012 to top 50 percent by 2015.

Qatar’s Sovereign Wealth Fund
Moreover, Qatar is investing its assets across the globe as it seeks to reduce its energy dependency. In this connection, the $US100bn-plus Qatar Holding, the foreign investment arm of the Qatar Investment Authority, has been the most active of the region’s sovereign wealth funds in recent years. It has stakes in companies including Barclays, Volkswagen, Porsche, Xstrata and Credit Suisse, which earned a 17 percent return on its investments in 2012.

Moreover, S&P Dow Jones Indices and Morgan Stanley Capital International have also already upgraded its “Emerging Market” status.

Doha Bank highlights that by the end of 2013, service activity is expected to contribute more than 60 percent of the total growth in Qatar’s economy. Expansion is expected in segments such as financial services, telecommunications and transportation. The National development strategy 2011-16 and Qatar’s National vision 2030 would be game changer in the days to come. Aggregate GDP growth in 2012-2016 is expected to average to 6.9 percent out of which Hydrocarbon GDP growth is by 4.4 percent and Non- Hydrocarbon GDP by 9.1 percent. Moreover, overall fiscal position is expected to healthy with surplus of 5.7 percent of GDP by 2016 and current account balance will remain high at 15 percent of GDP by 2016.

KPMG (2013)
According to KPMG’s (2013) Change Readiness Index (CRI) Qatar is a country with one of the best macroeconomic framework in place in the world. The country’s labour market and business environment have been rated as one of the most efficient. Qatar has been positioned third out of 90 countries in total with Singapore on top, followed by Sweden. Qatar’s strength found lying mainly in fiscal and budgeting and macroeconomic framework.

The country’s labour market got the highest score (0.86) ranking the country second among the 90 countries. The business environment score was also high rating the country again one of the world’s best. Under the government capacity pillar”, Qatar’s macroeconomic framework got a high 0.92 score with top ranking.

Growth Rate Continues
Qatar finance ministry and Central Bank indicate that “Qatar’s economy continued to maintain its strong growth momentum in Q2 of 2013. Its real GDP expanded at a robust 6 percent (year-on-year), spurred by double-digit growth in construction, transport and communication, and financial, real estate and business services.

The oil and gas sector only expanded by 1 percent year-on-year in Q2 2013, reflecting the moratorium on further exploration of the North Field. On the other hand, financial, real estate, and business services was the fastest-growing sector 15.4 percent year-on-year, as banking intermediation accelerated and real estate services were boosted by the growing population. Construction activity accelerated 11.4 percent year-on-year as Qatar’s infrastructure development programme is gathering momentum. In addition, manufacturing grew by 6.4 percent boosted by production from the new Pearl gas-to-liquids (GTL) facilities.

The acceleration in economic activity in the second half of 2013 is expected to be driven by the implementation of additional large infrastructure projects like the Doha Metro Rail project. The key driver of growth will therefore continue to be the non-hydrocarbon sector at least until 2015, when the Barzan gas project is expected to start production. It nationals has the highest average GDP per person in the world (more than $80,000 at last count).

Qatar National Vision 2030
Qatar’s National Vision provides the framework under which the National Development Strategy operates. It has multiplier effects. It is the road-map of a strategic development. It is a result and goal oriented long term policy. It covers all sectors of national economy, production, reforms and commercial diplomacy.

It speaks highly about social development including education, housing, health and the last not the least, clean drinking water. It is the giant policy initiative towards further diversification of national economy and resources. It is the step giant leap towards further economic prosperity, societal vibrancy, political harmony and above all national consensus and harmony in the days to come. It upholds the strategic vision of its dynamic leadership which always initiates such programs for the betterment of its people.

Qatar 2011-2016 National Development Strategy
It aims to achieve strategic balance for the generations to come. It will identify the priorities and directions the country which is pinpointed by the Qatar National Vision 2030. It is based on tangible actions and targets, which will be the benchmarks for the first wave of development projects.

Guided by the Qatar National Vision 2030, Qatar has produced one of the world’s most stellar economic performances over the last decade. Its diversification drive coupled with substantial investment in transport infrastructure, education, science, technology, health and tourism has created a dynamic base to support continued exceptional economic performance. The country’s low tax rate, codified rule of law, and welcoming policies for foreign investment have led to significant partnerships with a number of the world’s leading global enterprises.

Pak-Qatar Bilateral Relations
Pakistan and Qatar are blessed with deep-rooted and historical multi-dimensional relations based on cultural affinities, shared traditions and values, geographical proximity and identity of interests. Both the countries have traditionally been supportive of each other at the international fora. The warm, cordial and time honoured relations that so happily exist between the governments and the people provide an excellent footing for further enhancing bilateral economic cooperation.

Pakistan attaches high importance to the regional and strategic position of Qatar in the Middle East and appreciated the leading role it was playing in the Muslim world today. Pakistan keens to further strengthen and diversify these relations in all fields. Pakistan cherishes its historic brotherly relations with Qatar and wants them to be taken up to new heights through greater economic integration, healthy trade & commerce relations and joint ventures.

Pakistan and Qatar agree to transform their relations into mutually beneficial economic partnership. It is hoped that confidence that mutually beneficial economic, commercial and investment cooperation between the two countries will further bring the people of two countries closer. Pakistan invites Qatar’s investment in the energy, infrastructure and agriculture sectors.

More than 90,000 strong Pakistani community is playing an important role in the development of the fast growing State of Qatar. Qatar assures it would continue to support Pakistan’s desire to have a Free Trade Agreement (FTA) with the GCC countries. Qatar assures its full support to Pakistan’s efforts in facilitating peace and reconciliation process in Afghanistan.

Government of Qatar has recently constructed a model village in Rahim Yar Khan District comprising 200 houses of two rooms each, two schools, playground, mosques and a shopping area. It is constructed to rehabilitate people displaced by the recent floods.

Qatar has always stood by Pakistan in times of need.

Pak-Qatar JMC
Pakistan-Qatar Joint Ministerial Commission (JMC) provides an excellent opportunity to enhance economic and trade relations between the two countries. It is a useful institutional framework for an in-depth review of existing economic relations and identification of new opportunities for mutually beneficial cooperation in various fields.

Most recently both countries thoroughly discussed diverse issues, including joint development of hydropower sector, identification of sources of financing, exploration of investment opportunities in energy sector, rehabilitation of existing hydropower plants and infrastructure development. Pakistan provides ample opportunities to potential Qatari businessmen and investors in the following given sectors of the national economy. Earlier import of Liquified Natural Gas (LNG) from Qatar would reduce Pakistan’s energy deficits.

Strategic Cooperation
Forging closer links between the services industries of Pakistan and Qatar in terms of exchange of technology, movement of capital and the skilled manpower would be mutually beneficial for both the countries. Pakistani exploration and production companies in oil and gas sector desire to join hands with the Qatari companies for investment in upstream and downstream projects in Pakistan.

Most recently both countries signed several agreements and memoranda of understanding. The two sides reviewed bilateral relations and means of strengthening them in several domains and discussed a set of other regional and international issues of mutual concern.

(a) MoU on security co-operation between the interior ministries of the governments
of Qatar and Pakistan.
(b) MoU on exporting liquefied gas from Qatar to Pakistan.
(c) An agreement in the legal domain between the governments of Qatar and Pakistan.
(d) A cooperation agreement on Awqaf (Islamic endowments) and Islamic affairs
between the governments of Qatar and Pakistan.
(e) An MoU between the Ministry of Energy and Industry of Qatar and the Ministry of
Water and Energy of Pakistan for co-operation on developing electric and water energy.
(f) An MoU for co-operation on organising exhibitions between the governments of
Qatar and Pakistan.
(g) An agreement on mutual administrative assistance for coordination of customs
law between the governments of Qatar and Pakistan.

The origin of bilateral relations between both states can be traced back to visits of Qatari Amir Sheikh Khalifa bin Hamad Al Thani and reciprocal visits of Pakistani leadership in 1970’s and 80’s. Bilateral trade between two countries took boost since President’s Musharraf’s visit to Qatar in 2005. In the aftermath of earthquake in 2005, Qatar sent relief goods of almost $20 millions and also operated several medical camps in affected area of Pakistan. In a recent visit of Prime Minister of Pakistan Syed Yousuf Raza Gilani to Qatar, The Qatari Prime Minister assured the Pakistani side that their strategic interests will be secured and would never be compromised. The visit was ended at signing of different MoUs and bilateral agreements on import of LNG, security, custom and development of hydropower projects.

Exports from Pakistan (US $million)

Imports in Pakistan from Qatar (US million)

Worker Remittance from Qatar (US million)

Net Flow of Qatari Investment (US million)

Bilateral trade is much below the existing potential of economies and hoped that the Pak-Qatar Joint Business Council would act as a catalyst to promote interaction between the private sectors of both countries. Increase in joint ventures would reduce the balance of trade between the two countries in the days to come.

Concluding Remarks
Guided by the forward-looking policies of HH the Emir Sheikh Tamim bin Hamad al-Thani and in compliance the Qatar National Vision 2030, Qatar aims to be an advanced society capable of sustaining its development and providing a high standard of living for all of its people” for generations to come.

Qatar is the model of sustained economic development. It is icon of socio-economic prosperity. Qatar National Vision 2030 builds a bridge between the present and the future. It envisages a vibrant and prosperous country in which there is economic and social justice for all, and in which nature and man are in harmony. It is a welfare state which cares about its population.

Qatar’s National Vision has emerged from intensive consultation across Qatari society. It is based on the guiding principles of Qatar’s Permanent Constitution. It reflects the aspirations of the Qatari people and the resolve of their political leadership.

Comprehensive development is Qatar’s main goal in striving for the progress and prosperity in the days to come. Qatar enjoys a period of unmatched prosperity, with extraordinary economic progress being obvious in the increasing standard of living of its people. Major achievements in economic, human, political and social developments continue to occur.

Qatar has now become the land of wonders and corporate excels. It is one of the ideal homes of lavish hospitality. It reflects the true spirits of harmony and tolerance. Future of Qatar’s macro-economy depends on further diversification of economy, energy resources, widespread of social development, foreign direct investment, SMEs and above all human resource development.