During my five years in Qatar the country’s development has been nothing short of meteoric. Much of this growth is driven by development of gas reserves in the North Field. Indeed, no visit to Qatar is complete without a tour of the Ras Laffan complex, where one can truly appreciate the breadth of vision, complexity of engineering, and scale of financing and manpower that went into the transformation. In 2011, Sheikh Hamad bin Khalifa Al Thani, the father of the Emir, celebrated reaching his goal that Qatar produce natural gas at 77m tonnes per annum. This massive figure is the basis for the country’s $200bn+ GDP, and its having the highest per-capita income in the world. With a moratorium passed on further extraction, however, the days of high double-digit GDP growth are likely behind us. The government estimates growth below 5% for 2014. Over the past half-decade, Qatar has put itself on the map in other ways. In politics, we have seen a high profile in diplomacy across the Arab world. The Qatar Investment Authority (QIA) has steadily built its reputation as a worldwide investor, by supporting the global banking industry at the height of the financial crisis, investing in blue-chip companies and, via its subsidiary Qatari Diar, developing landmark real estate in the world’s premier cities. Al Jazeera has produced a global media brand. Qatar’s global prominence culminated when it won the right to host the 2022 FIFA World Cup. One big change in 2013 was the historic passing of leadership to the new Emir, Sheikh Tamim bin Hamad Al Thani. That a transfer of power could take place peacefully is a sign of Qatar’s stability. The change in leadership also came with many long-standing ministers stepping down, leading to a period of reflection. Overall, however, there seems to be continuity in the country’s vision. In 2014, Qatar will take its strategy for economic diversification to the next stage. For economic activity in 2014 and beyond, five sectors stand out.
Infrastructure & Urban Development
The scale of infrastructure-building in Qatar is well reported, with GDP estimates ranging to and beyond $200bn. With the impetus of Qatar 2022, we are already seeing a step up in activity, with the major delivery organisations awarding contracts in rail, ports, roads, real estate, power, water, renewables and waste water. Hamad International Airport will open at last in 2014.
Telecoms & Information Technology
The Qatar National Broadband Network will continue its domestic roll-out of next-generation infrastructure. Ooredoo and Al Jazeera will continue their overseas developments in Myanmar and the US, respectively.
The domestic industry will gear up to finance infrastructure development, with some consolidation as the market continues to be overbanked. The bigger domestic players will continue to use their strong balance sheets to expand overseas.
After a period of calm during the transfer of leadership, overseas acquisitions are likely to pick up. The QIA has reported a number of new senior hires focused on emerging markets, infrastructure and real estate. We also expect more activity from funds making sector-specific investments in sports, mining, real estate, hospitality and farming.
Downstream petrochemicals will be the focus for growth. The launch of Muntajat as the state marketing body for petrochemicals suggests the scale of ambitions. In the upstream sector, Qatar Petroleum’s international arm will continue to be highly active.
There are also risks. The development of shale and alternative gas internationally puts slow pressure on Qatar’s foreign gas market that, given the steady surge in global energy demand, the reduction of nuclear activity in Japan and Germany, and the relatively low cost of extraction in Qatar, is a medium- to long-term concern. As the Dubai Expo 2020 win boosts regional competition, inflationary pressures are likely, especially in construction. With Qatar in the international spotlight, more attention will go to sponsorship arrangements and the welfare of migrant labour. The outlook? We expect Qatar will move toward a more sustainable level of growth as it continues to diversify its economy.
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