Qatar per capita income and inflation soars

Only Luxembourg and Norway can now boast higher per capita incomes than the tiny Gulf State of Qatar, and with gas revenues planned to soar by four times over by 2012, Qatar is set to top the league of the richest nations fairly soon.

Economic and political reforms are compounding foreign investor confidence in Qatar these days. The GIH report highlighted foreign ownership of real estate in designated areas that followed a June 2004 decree, and the permanent constitution endorsed by a referendum in the same month.

But for 2005 the increase in per capita income will be even more dramatic thanks to surging oil and gas prices and higher exports. Indeed, it is possible that Qatar will emerge as the richest nation on earth as early as this year.

Population explosion

The population of Qatar has also ballooned in recent years, from 552,000 in 1997 to 744,000 by the end of last year, according to the Qatar Central Bank. Around 80% are expatriates, an inevitable consequence of high growth rates.

Not surprisingly, surging economic growth has been accompanied by high inflation. The Central Bank has published an official inflation rate of 6.8% for 2004, the highest among the GCC states, but this year inflation has pushed to much higher levels led by rental price inflation, way above last year's official rate of 16.2%.

The classic cycle for an emerging market economy is for high growth to be eventually choked off by inflation, traffic and infrastructure limitations; Qatar is investing huge amounts of money to boost its infrastructure and housing to cope with the boom.

But this misses the most important point about Qatar's economic growth. Mostly it is based on long-term LNG investment projects that are well in hand, and not especially dependent on other local infrastructure. And given the importance of gas to the future of an energy hungry world, Qatar is sure to overcome its short-term problems.