Qatar’s economy manages to sustain satisfactory results notwithstanding the diverse socioeconomic and sociopolitical challenges engulfing the region.
Recent positives include a final decision by FIFA, the global governing body for football, to hold the 2022 World Cup during winter rather than the customary summer schedule. As in the rest of the Gulf, the winter period in Qatar amounts to spring in the absence of extreme high and low temperatures.
The move translates into providing the organisers extra time, and the potential for stronger investment opportunities. By one account, the Qatari economy is projected to receive investments worth as much as $200 billion in the run up to the tournament. This covers construction of the stadiums and infrastructure projects like a novel metro system, as well as further expansion of the airport, port and road networks.
Capitalising on the positive effect from hosting the tournament, private investors — local and international — have their own investment projects. One such scheme is a $5.5 billion, 31-hectare mixed-use development, now known as Msheireb Downtown Doha. Aside from redeveloping, regenerating and conserving historical sites in the heart of the capital, the project will have hotels, office space, retail and leisure facilities, all currently under construction.
Another project is the Pearl-Qatar scheme, which spans an artificial island of nearly 4 million square meters and with upscale residential and commercial offering. Total investments could reach as high as $15 billion upon full completion. Currently, the project serves as home for some 12,000 residents.
The local firm of United Development Company is behind the mixed-use urban development scheme. UDC is a listed firm with connections in numerous fields, including real estate, insurance and lodging.
Not surprisingly, the diverse public and private investments are credited with help maintaining Qatar’s steady growth rate. Recently, Qatar National Bank projected a real GDP, adjusted for inflation, of 7 per cent, 7.5 per cent and 7.9 per cent for 2015, 2016 and 2017, respectively. These are stellar rates in normal condition, let alone at the time of relatively low oil prices. The petroleum sector is the main source for treasury and export income in Qatar.
To a good extent, this reflects growth in non-hydrocarbon sectors notably construction, financial services and real estate. In fact, four economic areas stand out in getting investments from local and foreign sources, in turn having positive spillover effects on the economy as a whole. These are those of mining and quarrying, manufacturing, building and construction, and professional, scientific, technical, administrative and supportive service activities.
There is another reason for the notable GDP growth rate, namely the absence of serious inflation pressures. Record low oil prices registered over the past few months deny exporters the chance to raise prices of their commodities and products at large.
Qatar imports most of its foodstuff as it lacks a competitive advantage in farming. But it does enjoy advantages in other areas like the hydrocarbons industry and, in the future, when it comes to handling mega events. Countries, like companies, cannot overlook the notion of competitive advantage.
Understandably, the influx of expatriates is adding to the growth in demand. Expatriates continue to converge into Qatar taking advantage of job opportunities emerging from the many projects and development schemes like Msheireb and Pearl-Qatar.
But the economy must be on the alert to handle the adverse effects of a drop of oil prices on its fiscal regime. Budgetary deficits are forecast for 2015 to 2017.
The writer is a Member of Parliament in Bahrain.