Economy

Petroleum is the cornerstone of Qatar's economy and accounts for more than 70% of total government revenue, more than 60% of gross domestic product, and roughly 85% of export earnings. Proved oil reserves of 15 billion barrels (2.4 cu km) should ensure continued output at current levels for 23 years. Oil has given Qatar a per capita GDP three-quarters that of the leading West European industrial countries. Qatar's proved reserves of natural gas exceed 7000 cu km, more than 5% of the world total, third largest in the world. Production and export of natural gas are becoming increasingly important. Long-term goals feature the development of off-shore petroleum and the diversification of the economy.

Economic Background

Before the discovery of oil, the economy of the Qatari region focused on fishing and pearling. After the introduction of the Japanese cultured pearl onto the world market in the 1920s and 1930s, Qatar's pearling industry faltered. However, the discovery of oil reserves, beginning in the 1940s, completely transformed the nation's economy. Now the country has a high standard of living, with many social services offered to its citizens and all the amenities of any modern nation.

Qatar's national income primarily derives from oil and natural gas exports. The country has oil estimated at 15 billion barrels (2.4 cu km). Qataris' wealth and standard of living compare well with those of Western European nations; Qatar has the highest GDP per capita in the developing world. With no income tax, Qatar is also one of the two least-taxed sovereign states in the world.

While oil and gas will probably remain the backbone of Qatar's economy for some time to come, the country seeks to stimulate the private sector and develop a 'knowledge economy'. In 2004, it established the Qatar Science and Technology Park to attract and serve technology-based companies and entrepreneurs, from overseas and within Qatar. Qatar also established 'education city' which consists of international colleges. For the 15th Asian Games in Doha, it established a 'sports city', consisting of Khalifa stadium, the Aspire Sports Academy, aquatic centres, exhibition centres and many other sports related buildings and centres. Qatar also plans to build an 'entertainment city' in the future.

Qatar is aiming to become a role model for economic and social transformation in the region. Large scale investment in all social and economic sectors will also lead to the development of a strong financial market.

The Qatar Financial Centre (QFC) provides financial institutions with a world class financial services platform situated in an economy founded on the development of its hydrocarbons resources. It has been created with a long term perspective to support the development of Qatar and the wider region, develop local and regional markets, and strengthen the links between the energy based economies and global financial markets.

Apart from Qatar itself, which needs to raise the capacity of its financial services to support more than $130 billion worth of projects, the QFC also provides a conduit for financial services providers to access nearly $1 trillion of investment across the GCC as a whole over the next decade.

Macro-Economic Trend

Qatar is now the richest country in the Muslim world. Current GDP per capita registered a world record-breaking peak growth of 1,156% in the Seventies. This became quickly unsustainable and Qatar's current GDP per capita contracted 53% in the Eighties. But rising global oil demand helped current GDP per capita to expand 94% in the Nineties. Diversification is still a long-term issue for this over-exposed economy.

Oil Production

In 1973, oil production and revenues increased dramatically, moving Qatar out of the ranks of the world's poorest countries and providing it with one of the highest per capita incomes in the region. Despite a marked decline in levels of oil production and prices since 1982, Qatar remains a wealthy country.

Qatar's economy was in a downturn from 1982 to 1989. OPEC (Organization of Petroleum Exporting Countries) quotas on crude oil production, the lower price for oil, and the generally unpromising outlook on international markets reduced oil earnings. In turn, the Qatari government's spending plans had to be cut to match lower income. The resulting recessionary local business climate caused many firms to lay off expatriate staff. With the economy recovering in the 1990s, expatriate populations, particularly from Egypt and South Asia, have grown again.

Oil production will not long remain at peak levels of 500,000 barrels (80,000 cubic m) per day, as oil fields are projected to be mostly depleted by 2023. Fortunately, large natural gas reserves have been located off Qatar's northeast coast. Qatar's proved reserves of gas are the third-largest in the world, exceeding 7,000 cubic km. The economy was boosted in 1991 by completion of the $1.5-billion Phase I of North Field gas development. In 1996, the Qatargas project began exporting liquefied natural gas (LNG) to Japan. Further phases of North Field gas development costing billions of dollars are in various stages of planning and development.

Qatar's heavy industrial projects, all based in Umm Said, include a refinery with a 50,000 barrels (8,000 cubic m) per day capacity, a fertilizer plant for urea and ammonia, a steel plant, and a petrochemical plant. All these industries use gas for fuel. Most are joint ventures between European and Japanese firms and the state-owned Qatar General Petroleum Corporation (QGPC). The US is the major equipment supplier for Qatar's oil and gas industry, and US companies are playing a major role in North Field gas development.