31 March 2017
Qatar: Economic Diversification Ensures Steady Growth
|Area||11,586 sq km|
|Currency||Riyal (pegged to the US dollar at a rate of QR3.64:US$1)|
|Form of government||Monarchy|
|Major Exports (% of total, 2014)||Major Imports (% of total, 2014)|
|Fuels and mining products (86.7%)||Manufactures (71.9%)|
|Manufactures (9.6%)||Agricultural products (9.2%)|
|Agricultural products (0.0%)||Fuels and mining products (6.1%)|
|Top three export countries (% of total, 2014)||Top three import countries (% of total, 2014)|
|Japan (25.2%)||European Union (28.4%)|
|South Korea (18.7%)||United States (11.4%)|
|India (12.7%)||China (10.6%)|
Source: Economist Intelligence Unit (www.eiu.com), World Trade Organization
Qatar is ruled by an absolute monarchy with the emir, Sheikh Hamad bin Khalifa al-Thani, as head of state and head of government. The 2004 constitution makes provision for the formation of a two-thirds-elected, 45-member parliament, which will have the power to draw up laws and question ministers. The first election was originally scheduled in 2013, however, this was postponed and no new date for an election has been set. Even if emir Sheikh Tamim proceeds with such an election, the ruling family is likely to maintain its absolute power over policymaking because of the limited powers granted to the Council by the constitution.
Qatar has been largely unaffected by the social unrest that has gripped parts of the Middle East and North Africa (MENA) region since early 2011, in part reflecting the high standard of living enjoyed by the nationals. Qatar has a population of 2.5 million, of which around 80% are foreign workers coming from India, Nepal and Philippines etc. Since Qatar’s successful bid to host the 2022 FIFA World Cup, it has become a focus of international criticism of the mistreatment of low-paid migrant workers.
|Nominal GDP (USD bn)||201.9||210.1||166.5||151.3||167.2|
|Real GDP growth (%)||4.6||4.2||4.2||3.0||3.2|
|GDP per capita (USD)||96,090||96,740||74,500||66,020||71,490|
|Budget balance (% of GDP)||14.2||17.0||0.6||-5.6||-1.8|
|Current account balance (% of GDP)||29.9||23.5||8.3||-4.9||-3.2|
|External debt (% of GDP)||67.2||65.4||85.0||99.4||92.8|
Source: Economist Intelligence Unit (www.eiu.com)
Qatar is one of the smallest Gulf countries in terms of population and geographical area but has the second largest gas reserves in the world representing more than 5% of the world total. Its economy relies heavily on oil and gas which accounts for more than 50% of GDP. While it maintains a sizeable hydrocarbon reserves, Qatar has been working to diversify its economy to other industries including tourism and financial services etc. It was also trying to create a knowledge-based economy through the construction of the Qatar Science and Technology Park, Education City, and Doha Sports City. Despite the sharp decline in oil prices since mid-2014, the economy in Qatar maintained steady growth rate of above 4% in the last two years.
However, the persistently low oil prices have significant impact on Qatar’s export revenue and fiscal balances. In its latest announced budget for 2016, the government expects to post the first budget deficit in 15 years, reflecting the ongoing fiscal squeeze brought about by low oil prices. Qatar has followed other Gulf countries in implementing cuts to subsidies. In January it was the fourth Gulf state to increase fuel prices, boosting prices of some fuels by as much as 35%. Earlier, the state electricity and water utility company, Kahramaa, had lifted the fixed tariff for electricity and water, allowing prices to increase in tandem with rising consumption. Nevertheless, according to the IMF, Qatar, with its strong and healthy fiscal buffer, is relatively well positioned among the MENA countries to face the storm of sustaining low oil prices.
Hong Kong-Qatar Trade
Total exports from Hong Kong to Qatar increased by 10.3% from HK$858 million in 2014 to HK$946 million in 2015. The top three export categories to Qatar were: (1) telecommunications, audio & video equipment (-2.1%), (2) office machines & computers (+53.9%), and (3) travel goods, handbags and similar containers (+79.0%), which represented 59.1% of total exports to Qatar.
ECIC Underwriting Experience
The ECIC imposes no special restrictions on covering Qatari buyers. For 2015, the number and the amount of credit limit applications decreased by 46.7% and 82.6%, respectively. Insured business increased by 35.2%. Major insured products were clothing (+18.7%), jewellery (+1,228.0%) and electrical appliances (-14.0%), which represented 93.9% of ECIC’s insured business on Qatar. The Corporation’s underwriting experience on Qatar has been satisfactory, with no claim payment or payment difficulty case reported during June 2015 to May 2016.