Under the vision of His Highness the Emir Sheikh Tamim bin Hamad al-Thani, Qatar has grabbed the world’s attention thanks to its incredible economic success. Within only a short period of time, Qatar has reached a golden era of prosperity where the State enjoys the highest GDP per capita in the world, is a magnet for foreign investment, and has experienced strong economic growth year after year.
In fact, Qatar has recorded a remarkable average annual growth rate of 14% over the last 5 years. So, what are the reasons behind this economic success story?
First and foremost, Qatar’s prosperity is the result of visionary leadership, His Highness the Emir’s focus on developing the Qatari society and economic development being a continuous key strategic goal. Through careful development of its oil and gas reserves, Qatar is now the largest exporter of natural gas in the world capped at 77mn tons per annum, but it is wrong to say that Qatar’s success simply comes from gas.
Qatar has wisely used financial surpluses from hydrocarbon revenues to develop and stimulate its wider economy, notably by allocating large financial resources into education, health and transportation, combined with huge infrastructure spending. Qatar also prudently realized at an early stage that its natural resources are finite, and economic diversification is necessary for long-term sustainable growth. Domestically, Qatar’s private sector has expanded rapidly in recent years, characterized by competitiveness, strength and productivity. The private sector has become a strong contributor to Qatar’s GDP, and overall economic growth is expected to reach almost 7% in 2014, thanks in large part to non-hydrocarbon growth. Internationally, Qatar is a major player in global markets and has acquired a diverse portfolio of investments in companies around the world and prestigious real estate projects for future returns and income streams.
While Qatar has received a lot of international attention from these high profile investments abroad, what is perhaps an even greater reflection of the State’s economic strength is the flow of foreign investment into the country. Qatar is now one of the most popular economic destinations for capital in the Middle East, with a large number of investment opportunities, a unique investment climate and a booming economy.
Foreign investors are attracted by Qatar’s political and social stability, strong economy, and growth opportunities associated with a sharply rising population. Qatar’s population is currently about 2.2mn, with a growth rate around 6.1% in 2013 and a staggering 13% for the period from 2003 to 2013. Qatar has also created an attractive investment environment for foreign companies by granting a host of benefits such as exemption from taxes, free transfer of funds, 100% foreign ownership levels and the ability to open branches of banks and insurance companies in the Qatar Financial Centre.
In addition to these factors is the advanced ranking Qatar has achieved in World Economic Forum’s Global Competitiveness Report during the past few years, and its first place among Arab countries further extends Qatar’s comparative advantage in the region for investment.
Since winning the 2022 World Cup bid, foreign investors have been especially attracted to infrastructure opportunities, with landmark projects including the New Doha Port, Doha Metro, the Sharq Crossing, a network of new highways and Lusail City, not mention the football stadiums themselves. Evidence indicates that investments in Qatar during the next ten years will focus on transportation, construction, tourism and hospitality industries, involving a mix of foreign and local investment. Foreign investment can be seen coming into the Qatar Stock Exchange too and this year’s MSCI upgrade from “Frontier” to “Emerging Market” status is expected to result in huge additional inflows of foreign funds into Qatari companies that have qualified to be included in the index.
Thanks to Qatar’s wise leadership and good international relations, Qatar’s economy has also benefited greatly through cross-border trade. For example, the depth and durability of economic relations and joint cooperation and growing business ties between Qatar and Turkey is distinctive and unique. Turkey is a strategic partner and a key player in Qatar’s construction sector and the total capital of Turkish companies operating in Qatar has reached $1.5bn. Qatari companies have also contributed to the development and support of the Turkish economy, especially in banking and real estate.
To conclude, the significant flows of foreign investment we see coming into Qatar today is one of the best barometers we have of Qatar’s economic strength. We are currently in a golden era of prosperity that is the culmination of years of visionary leadership and investment of hydrocarbon revenues back into Qatar’s economy and society. Furthermore, foreign investment is clear evidence that the international community is convinced by Qatar’s economic success story and that the State has a bright future ahead.
Gulf Times
8 June
