Now that the quarreling between the GCC members is over, it’s time to look at Qatar’s economic prospects in 2021.
Qatar’s economy achieved top credit ratings globally in 2020, showing remarkable resilience and efficiency during crises, such as the Covid-19 pandemic and the slump in oil prices, the Qatari Chamber said in its January 2021 edition of its monthly economic newsletter.
The International Monetary Fund (IMF) expects Qatar’s GDP to grow 2.7% in 2021 with the help of growing natural gas production and a rebound in domestic demand.
The IMF also lauded Qatar’s swift response in implementing containment measures to help limit the economic and social impact of the COVID-19 pandemic.
In November 2020, the total exports of goods (including exports of goods of domestic origin and re-exports) amounted to $4.48 billion, showing an 8.5% increase compared to $4.13 bn in October, while imports during the same month amounted to $2bn.
China was at the top of the countries of destination of Qatar’s foreign trade with about $1.1 bn, or a 16.2% share of the state’s total foreign trade in November 2020.
Aluminum topped the list of the private sector’s exports with a 29.6% share of the total value, followed by essential and industrial oils (21.1%) and industrial gases (14%).
In November 2020, India was a leading destination for private sector’s exports with close to $70 million.
GCC states had total exports worth 9.43% of the total value and were followed by Arab countries (excluding GCC states) which received a 7.6% share.
FDI into Qatar
Qatar’s Financial Centre is seeking to attract $25 billion of foreign direct investment inflows by 2022, its CEO Yousuf Al-Jaida told CNBC in an exclusive interview recently.
The interview comes a week after Saudi Arabia reinstated diplomatic ties with neighboring Qatar, ending more than three years of boycotts and blockade against the nation.
The reconciliation means a stronger, more powerful Gulf Cooperation Council, Al-Jaida said.
Doha competes with global financial centers in the region including Dubai in the United Arab Emirates, and Saudi Arabia’s capital Riyadh.
Al-Jaida said Doha’s edge over its rivals is the push to develop Islamic finance and fintech, as well as financial services in general.
The financial center’s ambitious FDI target, along with the goal of creating 10,000 new jobs and more than 1,000 companies by 2022, will get a boost from the GCC detente, he said.
“From a QFC perspective, multinational corporations are pretty much based in the entire GCC, and it’s going to mean more liberal travel, more access to markets. It’s going to mean more foreign direct investment for Doha. So we’re very optimistic about that,” Al-Jaida said.
According to the World Bank, Qatar’s economy is expected to grow 3% in 2021 and is the best among GCC countries.
Qatar, one of the world’s richest countries per capita, has also set its sights on sports. The country is slated to host the World Cup in 2022.
According to Brookings Institution, flights between Qatar and its Gulf neighbors totaled 70 per day before the fallout. The airline sector, hit hard by the global pandemic, stands to benefit significantly from the cooling of tensions.
Before the blockade, trade flows between Qatar, Saudi Arabia, and the UAE were in the billions, and in the millions with Bahrain, the think tank said.
Qatar’s non-oil economy
A resolution of the dispute between Qatar and its Gulf neighbors is expected to bolster prospects for the gas-rich nation’s non-oil economy over the medium term, according to Fitch Ratings.
“A resumption of travel links will eventually lift tourism inflows, and greater interest from regional buyers could support the real estate market, which has been in a multi-year downturn,” the rating agency said in a note.
Fitch expects government debt-to-GDP ratio to reach 76% in 2020, up from 60% in 2017.
Contingent liabilities are large, especially those from local banks. Lenders’ net foreign liabilities rose to $130 billion, or 70% of GDP, in 2019.
The government’s asset position mitigates some of the risks from high indebtedness; Fitch estimates sovereign net foreign assets at 137% of GDP in 2019.
Qatar’s economy contracted by 4.5% in the third quarter from a year earlier, government statistics showed.
Real gross domestic product (GDP) rose by 5.6% in the third quarter compared to the second, based on constant prices, data from Qatar’s Planning and Statistics Authority showed.