Political and Economic
Qatar is a peninsula
situated halfway along the West Coast of the Arabian Gulf.
It has a number of islands; the most important ones are Halool,
Shira’aw, Al-Ashart and others. Its
topography consists of a rocky flat surface with some limestone outcrops in Dukhan
area in the west and Fuwairit area in the north. The surface is full with
characteristic depressions called Rawdat, particularly in the north and central
plains. The total land area of Qatar including the islands is approximately
11,521 square kilometers. The population of Qatar amount to 743,000 inhabitants
(according to the initial results of the second stage of the 2004 population
census) compared to 522,000 inhabitants in the last census conducted in 1997 and
83% of the inhabitants reside in Doha and its main suburb Al-Rayyan.
Qatar became independent
from the UK in 1971 and since then has been ruled by the monarchy (Emir) of Al
Thani family. The country is ruled by Sheikh Hamad bin Khalifa al-Thani since
1995 who has pursued a programme of gradual political and economic reform, with
a particular focus on developing the country's massive natural gas reserves.
Sheikh Hamad has appointed a cabinet of ministers and rules the country
with their assistance. However, under the new constitution—passed
overwhelmingly in a nationwide referendum in 2003—a new national assembly will
be created, two-thirds of the members of which will be elected.
Since 1995, the Emir of Qatar has
emphasized heavily on the development of its oil and gas resources and
developing its economy. Qatar’s proven oil reserves of 15 billion barrels
(588,000,000 m³) and oil has given Qatar a per capita GDP that ranks among the
highest in the world. Qatar's proven reserves of natural gas exceed 7000 km³;
more than 5% of the world total and is the third largest in the world. However,
with work on a range of gas-based export projects
under way, the government has decided to impose a moratorium on new gas export
deals in order to ease capacity constraints and re-evaluate the country's energy
reserves. As a result, it is seeking to draw greater foreign investment into
other areas, with ambitious plans in place to expand Qatar's petrochemicals
industry, manufacturing base and tourism sector, among others.
predominantly remained dependent on the oil and gas sector, though in the recent
past, the contributions of the Finance, Insurance, Real Estate & Business
Services Sector, Transport and Communications Sector and the Manufacturing
Sector in the GDP have witnessed marked improvement.
During 2005 to 2007, the Finance, Insurance, Real Estate & Business
Services Sector witnessed a growth of 49%, 45% and 49%, respectively. Qatar is
poised to be a leading international financial services sector among the Gulf
countries. Similarly, the Transport and Communications Sector witnessed a growth
of 27%, 40% and 37% during 2005 to 2007, respectively. The Manufacturing Sector
which is the second largest economic sector other than the oil and gas and
Government services sectors witnessed a growth of 22% and 21% during 2006 and
2007, respectively. Along with
rapid economic and infrastructure development, particularly since 2005,
Electricity and Water Supply Sector, Building & Construction Sector and the
Trade and Restaurant Sector also recorded significant growth.
Merchandise exports have
surged in recent years, as oil prices have increased and energy export volumes
have grown. As a result, the current-account surplus increased from US$3.8bn
(19.4% of GDP) in 2002 to US$9.5bn (16.7% of GDP) in 2006. However, it narrowed
slightly in 2007, to an estimated US$5.5bn, reflecting both rapid import
spending growth and a small fall in oil production.
Rising oil prices combined
with fast pace economic development had its impact on money supply and inflation
also. Money Supply (M2) sharply increased from US$ 12.3 billion in 2004 to US$
17.7 billion, US$ 24.4 billion and US$ 32.3 billion during 2005, 2006 and 2007,
respectively. Inflation also increased sharply from 2.3% in 2003 to 6.8%, 8.8%,
11.85% and 13.76% in 2004, 2005, 2006 and 2007, respectively. Average inflation
is expected to peak in 2008, at 15%, as high oil prices, rising import costs and
increased fiscal expenditure cause liquidity to surge.
Politically, Qatar is
expected to remain stable as its external security will continue to be
guaranteed by the US, which has substantial military facilities in the Emirate.
The Emir, Sheikh Hamad bin Khalifa al-Thani, will retain a strong grip on
policy-making but pursue a policy of involving the general public into politics
through the Majlis al-Shura (Consultative Council).
Qatar is one of the smallest Gulf Countries in terms of
population and geographical area but the second largest gas reserves in the
world representing more than 5% of the world total. The prosperity of natural resources coupled with the growing
and diversifying economy means enormous access to investment opportunities and
incentives. The Qatari government
adopts a policy aiming at diversifying income resources and developing economic
infrastructure. Specifically, the
government expanded the exploration projects in oil and gas sectors and offered
numerous incentives to attract foreign investors to carry out similar projects.
The Qatari economy is one of the most rapidly growing economies in the
world offering the international community a variety of world-class and
cutting-edge products and services.
nominal GDP growth continues to reach record levels, averaging 25% over the past
five years. Oil prices are expected to remain high over the forecast period,
supported by continued strong global demand, especially from Asia. Oil prices
are expected to increase by the middle of 2009 reaching an average of
US$120/barrel by end-2012.
government is likely to end its moratorium on entering into new gas export
projects towards the end of the forecast period, allowing new liquefied natural
gas (LNG) and, potentially, gas-to-liquids projects to be given the go-ahead.
Real GDP growth will peak in 2009, at 13.4%, as the LNG programme reaches its
high-point, but will slow to a still strong 5.2% in 2012.
The current-account surplus will widen sharply until 2010, as
LNG export volumes triple, although the pace of expansion will be curbed by
surging income debits (owing to rising profit repatriation by foreign firms).
However, the surplus will stabilise in 2011-12, as gas export sales growth
slows. Qatar has the highest GDP per capita income in the world estimated at US
$68,467 in 2008.
However, inflation is
expected to moderate from 2009, as new property comes on stream and global
non-oil commodity prices fall back, causing average inflation to decline to
around 5% by the end of the forecast period.
provides a no-tax regime for its people and expatriate workforce. Companies from
the GCC countries are required to pay a tax of 12%, while their non-Gulf
Cooperation Council counterparts are required to pay a corporation tax up to a
maximum of 35%. However, Qatar is expected to lower this rate to 12% in the near
future. The country has set up
tax-free zones in which a tax holiday of 20 years is provided. It welcomes
foreign participation in joint ventures to invest in all the various sectors of
its economy with 51% Qatari participation. Profits in the hydrocarbons sector
are taxed differently, according to the share of the company in the project and
the level of capital investment.