Qatar due to overtake Swiss per capita GDP

Yet the enormous expansion of LNG output from Qatar is only just getting underway, and so this is the start rather then the end of the economic boom for this small peninsula in the Persian Gulf.

The country with the best economic outlook in the world is Qatar. This is not optimistic hyperbole but the honest opinion of the few economists that study Gulf economies in depth. However, mindful of regional rivalries they prefer to keep their comments off the record.

But the best published reports are from Qatar National Bank. The latest QNB Economic Review estimates GDP growth of 20.5% in 2004, slightly up on 19.8% in 2003. Qatar's GDP per capita last year stood at $36,476, and at this sort of growth rate will overtake Switzerland next year.

Already in terms of hydrocarbon assets per capita, Qataris are all multi-millionaires. And this position is going to get stronger over the next decade.

Qatargas expects LNG exports to rise from 9.3 million tons per annum in 2004 to 17.3 million tons per annum by 2009, and there are supply agreements in place for 25.2 million tons by 2012. LNG is widely seen as the clean, safe fuel of the future, and Qatar will become the world's largest LNG producer by 2012.

It is ironic that when Shell discovered gas in Qatar in 1971 nobody was very interested. Indeed it is only since the mid-1990s that major LNG projects have been initiated and this long-term investment - using foreign expertise and capital - is the reason for Qatar's extremely favorable economic outlook.

Economic diversification

The Government is also diversifying its economy as far as it is able, although the expansion of most sectors is sensibly linked back to the LNG programme. The tens of thousands of expatriates who will work on the LNG projects in the near future will all need suitable accommodation, health, education, transportation and leisure infrastructure.

Over the next five years Qatar is to spend around $75 billion developing its hydrocarbon assets, and $15 billion on infrastructure. There is a real estate boom with rents spiraling upwards, and 37 hotels are to be built along with The Pearl-Qatar, a $3.5 billion luxury land reclamation project with freehold ownership.

Of course any projection of Qatar's GDP is crucially linked to oil and gas price trends. However, in view of the demand for hydrocarbons from emerging economies like China and India, and the global limitations on supply, it may well be that Qatar is one of the few nations to have developed additional supply at a time of rising energy prices.

In that case, assumptions about Qatar's future growth potential and GDP are too cautious, and should be revised upwards.