2010 was a banner year for Qatar. The nation punched well above its weight over the course of the year and looks set to continue to make headlines in 2011 and beyond.
Without doubt, the biggest local story in 2010 was FIFA’s decision to award Qatar the right to host the 2022 World Cup. Though many were surprised when international football’s governing body named Qatar as the venue for the tournament at the beginning of December, Doha is set to win over critics by spending $60bn or more to stage the world’s most watched sporting event, and has vowed to combine high technology with even higher environmental standards to do so.
While a feel-good story in itself, winning the bid to host the 2022 World Cup will be even bigger news for Qatar’s economy. The projects associated with staging the event are likely to spur a range of sectors, with the construction, hospitality, banking and transport industries just some of those set to gain from the significant levels of funding that will flow over the coming decade.
Even without the projected spending boom, Qatar’s economy is surging. While year-end figures have yet to be compiled, it seems more than likely that the 16% expansion predicted for GDP will easily be met and possibly surpassed. According to figures released by the Qatar Statistics Authority on January 2, GDP grew by a stunning 21.1% in the third quarter of 2010 compared to the same term the year before. With the third-quarter GDP up 13.1% on the preceding quarter, and the economy continuing to build in the final months of the year, the 16% growth rate predicted by the IMF in October could well be exceeded.
Looking ahead, the IMF has forecast that GDP growth will continue at the same pace or faster, suggesting that Qatar’s economy could grow by up to 20% in 2012, in part a result of the first wave of spending on World Cup-related projects but also on other high-profile infrastructure work, much of is related to transport and logistics. These include the ongoing work on Qatar’s new $13bn international airport, up to $20bn worth of roads and highways, and looking further down the track, up to $40bn of light and mainline railways set to be built in the coming years.
Though Qatar is investing heavily in diversification, oil and now increasingly predominantly natural gas will continue to be the foundation of the economy for the foreseeable future. It is a foundation that is steadily expanding. In mid-December, Qatar marked another milestone, achieving its targeted liquefied natural gas (LNG) production capacity of 77m tonnes a year, a level that was scheduled to be reached in 2012. However, having fast-tracked infrastructure projects Qatar was able to bring the latest of its massive gas-processing trains at the Ras Laffan Industrial City up to speed two years early, with production set to start in February.
Doha also has other energy projects in the pipeline, including the $8.6bn Barzan gas facility, which will process the natural gas take from Qatar’s North Field for use by the country’s own burgeoning industrial base, including planned petrochemicals plants.
Though Qatar’s economy is expected to remain in robust health for the foreseeable future, amongst possible clouds on the horizon, inflation is a key consideration. Throughout 2010 price rises remained at moderate levels, with year-on-year inflation running at just over 3% as of the end of November. While a far cry from the 15.2% rate for 2008, there are concerns that price rises will start to edge up again in the new year, as a stronger economy and increased consumer spending power fuel demand.
One of the factors that has helped to reduce Qatar’s inflation rate over the past two years has been falling rental costs. However, the expected influx of overseas workers needed to develop the range of infrastructure schemes planned over the next decade, along with the World Cup venues and associated projects, could see additional pressure put on the rental market, resulting in a new price surge.
Having closed out 2010 as the fastest-growing economy in the world, and with prospects going forward looking equally strong on the back of government and World Cup-linked spending, Qatar seems set for a prosperous and profitable new year.