Despite challenging times, Qatar remains one of the most competitive and powerful economies in the region. known for its gas reserves, Qatar has not been affected by the drop in the price of oil to the extent of other countries who heavily rely on oil exports, and are now forced into making painful public spending adjustments.
Weaker oil prices have led to a contraction in hydrocarbon revenues but non-hydrocarbon sector growth is strong and expected to be around 5.7% in 2017, contributing to an overall GDP growth of just under 3%. This is an enviably good rate compared to other parts of the world and is the highest forecast in the GCC. Qatar has maintained its position at the top of the international table for GDP per capita.
The reason for Qatar’s position of strength is thanks to the wise and far sighted leadership of the country. Qatar has an ambitious and long-term development plan under the National Vision 2030 to diversify its economy, with infrastructure spending related to transport, education, sports, healthcare, telecommunication and hospitality being a key part of this plan.
Healthy economic growth in times of weaker oil prices is a demonstration that the strategy of economic diversification is already proving successful. Non-hydrocarbon growth is led by the construction sector, and with a renewed commitment from the government to spending on key projects in preparation for the World Cup, top-down government spending on infrastructure will remain a primary growth driver of the economy. Qatar is assembling one of the most advanced multi-modal transport infrastructure systems in the world that will facilitate long-term sustainable economic growth through the movement of people, goods and information.
By air, the iconic Hamad International Airport connects Qatar with over 150 destinations across the world and combined with Qatar Airways’ huge fleet of the latest aircraft means that Qatar is proving more than a match for the global aviation industry’s old guard carriers.
Investment is not just limited to transport and Qatar has made major strides in transforming the education sector, spearheaded by Qatar Foundation and a number of foreign universities with branches in Education City. In addition to the universities, Education City also hosts world class scientific and research companies in the Qatar Science and Technology Park (QSTP) and major funding has been allocated to new schools. The growth and improvement in quality of Qatar’s health sector has also been a major success story. The first National Health Strategy (NHS) 2011 – 2016 has helped to deliver the health objectives contained in the National Vision 2030, with the human development pillar entailing a holistic and modern healthcare infrastructure that caters to all. Qatar’s investment in health is also much more forward-thinking than simply building new healthcare facilities and staffing them. One of the NHS’ seven strategic goals is an ambitious home-grown healthcare research programme, and this will only strengthen Qatar’s transition towards a diversified, knowledge-based economy.
Any assessment of Qatar’s economic strength should also include Qatari banks successful rise story and Qatar Investment Authority (QIA), our sovereign wealth fund that invests surpluses of oil and gas revenues to diversify revenues and minimise risk from a reliance on energy prices. With assets now estimated to be around $330bn, the QIA is helping to guarantee Qatar’s future economic sustainability by not only providing alternative sources of income but the huge amount of foreign assets held have been successful in protecting Qatar’s strong sovereign credit rating. Qatar’s economic fundamentals remain robust and Qatar will continue to be an outstanding economic success story in the region based on wise leadership.
Dr Abdulaziz A al-Ghorairi is senior vice-president, group chief economist and head of asset management at Commercial Bank.