|Qatar Experiencing Economic “Woahs!”
by Ben Hernandez Jr.
Monday, August 15, 2011
In the midst of a global recession, the country of Qatar has managed to turn the other cheek and continue on a path of unprecedented growth. According to rates published by the International Monetary Fund (IMF), Qatar ranks as the number one country in terms of real Gross Domestic Product (GDP) growth rate—16.27 percent—more than three times the average real GDP growth rate for the entire world. It begs the question, “What is spurring this unparalleled growth while countries are still regaining their financial footing in this recession?”
A closer look at Qatar’s economy can help answer this question. Every time consumers feel the pocketbook pain at the gas pump, countries like Qatar are benefitting. The country is one of the twelve members of the Organization of Petroleum Exporting Countries (OPEC), which accounted for over 80 percent or 1,193 billion barrels of the world’s crude oil reserves in 2010. Qatar, itself, accounted for 25.38 billion barrels of the world’s crude oil reserves in the same year. For the past decade, the price of crude oil has grown exponentially, reaching an apex of $95.25 (inflation-adjusted) per barrel in 2008.
Since petroleum accounts for more than 60 percent of its GDP, revenues from the increase in oil prices have directly elevated the standard of living in Qatar. Qatar’s GDP (PPP) per capita in 2010 was over $88,000, putting the country on top of the world list based on IMF numbers. In addition, it was ranked third in GDP (nominal) per capita the same year.
Can Qatar continue to satiate the world’s need for oil? The sustainability of oil is a growing concern, especially with various experts touting that the world’s oil supply could run out in as little as 10 years while some say it could last indefinitely. Other sources advertise that based on Qatar’s oil reserves, the country can maintain its current output for the next 20 years or so, but of course, revenue projections are held hostage by the volatility of oil prices. Whether these forecasts depict an accurate assessment or not, Qatar has a viable Plan B—natural gas. The country boasts the third largest supply of natural gas, accounting for five percent of the world supply. Natural gas reserves in Qatar are estimated to be over 250 trillion cubic feet.
The Arab Monetary Fund (AMF) contend that strong oil prices coupled with high gas exports will allow Qatar to continue to maintain its exponential growth in 2011.
“Qatar’s real GDP is projected to surge by around 20 percent this year against growth of 16.3 percent in 2010 as a result of high oil prices and expansion in its liquefied natural gas (LNG) exports and infrastructure projects,” said the AMF in the news source, Emirates 24/7.
Furthermore, the AMF asserts that this growth will also benefit the country’s fiscal balance, both externally and internally.
“Qatar’s budget recorded an estimated surplus of 12 percent in 2009-2010 against 14.1 percent in the previous fiscal year,” said the AMF. “Preliminary projections show there will be a surplus of around 10.6 percent this year.”
As the AMF stated, this has helped the Qatar government provide funding for infrastructure, such as ports and highways that will support gas production. This is part of the country’s national agenda, which is dubbed “National Vision 2030.” According to the General Secretariat for General Planning, the goal of National Vision 2030 is for Qatar “to be an advanced society capable of sustaining its development and providing a high standard of living for all of its people.” Thus far, that appears to be coming to fruition.
Looking ahead, the country is flexing its financial muscle and expanding in another areas, such as sports. Just recently, Qatar purchased a stake in the London 2012 Olympic Village—a $906 million investment. The joint agreement with a British developer will allow Qatar to purchase and manage the athletes’ village upon completion of the 2012 Olympics, which is scheduled to take place in London. Just last year, Qatar successfully procured the right to host the World Cup in 2022.
As evidenced, Qatar’s energy sector has managed to give the country a bulletproof economy while most of the world is licking its wounds inflicted by the global recession. As long as the world continues its dependence on oil and natural gas, countries like Qatar will be prospering in a time when economic woes are abundant. Of course, after looking at Qatar’s economic growth, economic woes are more accurately expressed as “economic woahs!”