The World Cup and slowly rising oil prices may restart growth
The helicopter view
Despite being one of the richest countries in the world – with the highest GDP per capita – Qatar’s economy has hit a wall. The rapid growth over 20 years of a flourishing hydrocarbon industry came to an abrupt halt when oil and gas prices dropped suddenly at the end of 2014.
As oil prices start to creep up again – and preparations for the 2022 World Cup provide a welcome boost for infrastructure – growth of 2.7% is predicted in 2018, and should increase to 2.8% next year, according to FocusEconomics.
Supply chain issues
Diplomatic sanctions have had an effect on Qatar’s supply chains. When six countries – including Saudi Arabia and the UAE – cut ties with the country in 2017 amid claims it was funding terrorism, the impact was felt immediately, with both trade and travel feeling the strain.
Since the start of the blockade by its neighbouring nations, Qatar has had to look further afield for foreign investment. The Qatar Financial Center in Doha said it hopes to create links with Asian countries such as Thailand and Vietnam.
Qatar is ranked as the most peaceful country in MENA and is making progress towards a knowledge-based economy. The government is also investing in healthcare and education.
The country’s overdependence on oil and gas – which make up the majority of exports and around 50% of GDP – will continue to be an issue if it fails to diversify.
With a budget deficit putting non-essential developments on hold, and potential growth tied to oil prices – as well as hampered by World Cup commitments – the fiscal outcome is a real case of ‘wait and see’.