The relatively small sovereign Arab state of Qatar is earning itself an increasingly impressive economic profile. Having won the bid to host the 2022 World Cup the state is fast making a name for itself a major economic player on global level.
Qatar’s domestic assets are significant, with savings accounts from local and national banks in an incredibly healthy condition, but how exactly did Qatar’s economic outlook get to be so bright? We take a look at the major reasons.
First and foremost, the country’s GDP growth has been on the up during 2013 and for several years previous. QNB Bank published an Economic Insight report on the state in September which revealed that Qatar was the world’s fastest growing economy in the period of 2008-2012. QNB reported that during this time period the country enjoyed ‘a real GDP compounded annual growth rate of 12%’.
These are impressive statistics and Qatar’s growth rate looks set to continue, with strong figures for 2013, with 6.2% GDP expansion in the first quarter alone.
So, what is causing Qatar’s GDP to grow at such an impressive rate? The state is best known for its hydrocarbon industry and this continues to be it’s significant economic sector. Oil and gas have been the main reason behind the state’s rapid growth, and Qatar benefits from significant industry wealth. In fact, the state has the highest oil and gas wealth per capita of anywhere in the world according to the QNB report.
The report also outlines how ‘relatively high international oil prices will continue to produce large current account surpluses.’ This stands Qatar in good stead when it comes to the value of their most significant exports going forward.
A Diversified Economy
The services and manufacturing sectors are also hugely influential when it comes to understanding Qatar’s spectacular growth. This diversification could be seen to be the key strength of Qatar’s economy in the years to come, as telecommunications, financial and government services become increasingly significant contributors. In fact, Qatar’s non-hydrocarbon sectors are now making up more than 40% of the economy.
A Strengthened Infrastructure
The fact that Qatar is to host the World Cup in 2022 has surely been a driving force behind the state’s projects to boost infrastructure over the coming years. In fact, the construction industry is boasting a growth rate of 11.7%. These developments include the construction of a metro rail network in the capital, Doha and an improved rail system throughout the country.
Road networks will also be developed and a number of construction projects are currently underway, which obviously include the 2022 World Cup Stadiums. This strengthened infrastructure underpins Qatar’s economic growth.
The Banking Sector
Growing in tandem with Qatar’s economy is its banking sector. Profitability has been high over the past three years with QNB reporting that they expect this to be maintained into 2014. The developments in public infrastructure spending will pave the way for credit growth.
With so much positive activity, it’s no wonder that Qatar boasts one of the world’s strongest economies. A steady population growth and the arrival of an increasing number of expatriates snapping up business opportunities only strengths the country’s position for further economic growth. Furthermore, world events like the World Cup and the country’s bids for Formula One test races next year are placing this Middle Eastern rising star firmly on the international map.
Image by Jimmy Baikovicius, used under Creative Comms license