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Qatar: Market Profile

Major Economic Indicators

 

2010

2011

2012*

Population (million)

1.7

1.8

1.8

GDP (US$ billion)

127

174

185

GDP Per Capita (US$)

74,901

98,144

100,378

Real GDP Growth (%)

+16.7

+14.1

+6.3

Inflation (%)

-2.4

+1.9

+2.0

Exports of Goods (US$ million)

72,040

114,299

117,950

Export Growth (%)

+49.1

+58.7

+3.2

Imports of Goods(US$ million)

20,937

26,926

32,636

Import Growth (%)

-6.7

+28.6

+21.2

Exchange Rate (Riyal : USD)

3.64

3.64

3.64

Source: IMF, EIU
* IMF, EIU estimates

Recent Developments

  • After consecutive years of double-digit growth, Qatar is expected to see slower economic growth of 6.3% in 2012 due to slower growth of its hydrocarbon sector and the lingering European debt crisis. Besides, Qatar’s real GDP is projected to rise by 4.9% and 5.1% in 2013 and 2014 respectively.
  • In the run-up to the 2022 FIFA World Cup, plus its bid for hosting the 2024 Olympics, massive infrastructure projects are underway, including the construction of stadiums, rail connection and highways.
  • Hong Kong's exports to Qatar grew by 37.3% to US$93 million in 2012, while imports soared by 301% to US$150 million.

Current Economic Situation

Qatar experienced high economic growth of averaging 15% in 2010 and 2011 due to its rapid gas production expansion as well as high hydrocarbons prices. However, the country’s real GDP growth slowed to 3.9% year-on-year (YoY) in Q3 2012, down from 7.9% and 5.0% in Q1 and Q2 2012. The IMF expects the Qatari economy to expand 4.9% and 5.1% in 2013 and 2014 respectively, following an estimated growth slowdown to 6.3% in 2012 due to the moderating growth of its hydrocarbon sector and the lingering European debt crisis.

Qatar's General Secretariat for Development Planning (GSDP) expects economic growth to ease in 2013, mainly due to a slowdown in hydrocarbon sector investment, with the oil and gas output in 2013 to decline slightly by 0.2%. On the other hand, the non-oil economy is seen as maintaining momentum to have expanded by 7.7% YoY in Q3 2012, especially in the sectors of construction, transport and communications. The share of non-oil sector in the country’s GDP increased from 42% in 2011 to 57% in Q3 2012, with the construction sector rising 9.4% as infrastructure building accelerated.

In the run-up to the 2022 FIFA World Cup, plus the bid for hosting the 2024 Olympics, massive infrastructure projects are underway, including the construction of stadiums, rail connection and highways. The government will also have to meet its commitment to build 90,000 hotel rooms by 2022. The Qatar Tourism Authority (QTA) expects the share of travel and tourism in GDP will rise from 0.7% in 2011 to 6.4% in 2021.

Qatar was the world’s largest liquefied natural gas (LNG) exporter and ranked the third largest gas reserves behind Russia and Iran in 2011. Its LNG production has been surging since 2003, from about 13 million tonnes per year (mty) to 77 mty in 2011.

After completing the LNG investment programme in 2011, Qatar has started to concentrate on downstream energy sectors. According to the Energy Ministry, the government will spend US$25 billion to raise the current petrochemical output from 9.2 mty to 23 mty by 2020. This new long-term strategy aims to further diversify the economy and reduce gas dependency.

Qatar uses its trade surplus accumulated from oil and gas wealth to establish the Qatar Investment Authority (QIA). In April 2012, the QIA indicated that the fund had far exceeded US$100 billion. The QIA and its subsidiaries invest in leading companies in many sectors, such as hotels, in the hope that their experience can help lift Qatari standards, and diversify the economy.

Qatar’s government will concentrate on further diversifying the domestic economy, particularly in the industrial and domestic trade sectors. In 2012, the wholesale and retail trade sector expanded by 11%, accounting for 5% of the Qatari GDP. Most of the employees in the wholesale and retail sector were non-Qataris (98%).

Qatar’s media sector is in a leadership position in the Gulf. Al Jazeera, a news network based in Doha, is renowned for its broadcasting independence. The broadcaster has centres in Doha, Kuala Lumpur, London and Washington DC, making it a Middle Eastern broadcaster with a global reach.

Trade Policy

Qatar is a member of the World Trade Organisation (WTO), and maintains a liberal trade regime.

Non-Qataris are barred from engaging in distribution activities in Qatar. Importers, who must be Qatari nationals, have to register in the Importers Register and be approved by the Qatar Chamber of Commerce and Industry (QCCI).

Qatar maintains a strong tie with other fellow members of the GCC (which consists of Saudi Arabia, Kuwait, Oman, the UAE, Bahrain and Qatar). In November 1999, the GCC agreed to form a customs union, which took effect from January 2003 to zero-rate the goods traded within the GCC. To qualify for zero-tariff, such goods must be accompanied by a certificate of origin (CO) by the chambers of commerce in the GCC. Under the accord, goods imported into the GCC area can be freely transported subsequently throughout the region without paying additional tariffs.

The standard rate of external tariff is 5% (ad valorem) in accordance with the GCC customs union. As a result, Qatar’s customs duty is calculated on the CIF value at the rate of 5% for most Hong Kong products. It also provides a list of items that can be imported duty-free. When only the FOB price is available, duty is based on the 15% on the FOB price. According to the WTO, Qatar‘s simple average most favoured nation (MFN) applied tariff was set at 8.0% for agricultural goods and 4.6% for non-agricultural goods in 2011.

Certain local manufacturers are protected by a higher customs duty. For example, Qatar has a 15% tariff on records and musical instruments, 20% on steel and cement, 30% on urea and 100% on Tobacco products. Pork and pork products are illegal to import under Qatari law.

The GCC has approved exemptions for approximately 400 goods (including basic food products such as live animals, fresh fruit and vegetables, seafood, wheat, flour, rice, feed grains, spices, seeds for planting and powdered milk), diplomatic and consular imports, military and security products, civilian aviation, personal effects and used household items, passenger accompanied luggage and gifts, goods destined for charitable use, ships and other vessels for the transport of passengers and floating platforms, and products to be used for industrial projects.

With the approval of the Director General of Customs, some categories of goods may be temporarily allowed to be imported without collection of customs duties. These include heavy machinery and equipment for project execution, semi-finished products, use in exhibitions and temporary events and machinery, equipment imported for repair, containers and materials for refilling, animals for grazing, and commercial samples. This approval is normally valid for a period of 6 months, but may be extended by another 6 months.

Two Free Zones, namely the Qatar Financial Centre (QFC) and the Qatar Science and Technology Park (QSTP), have been established, with tax & duty incentives provided. Currently, Qatar’s government is encouraging foreign investment by streamlining licensing and financial sector regulations, with the corporate tax rate set at 10%.

Qatar’s currency, the Riyal, is pegged to the US dollars at 3.64. In 2009, Qatar, Saudi Arabia, Bahrain and Kuwait have brought the Gulf Monetary Union into effect, a big step to create a single gulf currency. But the establishment of single currency is unlikely to happen soon due to the European debt crisis.

Hong Kong's Trade with Qatar

Hong Kong's total exports to Qatar grew by 37.3% to US$93 million in 2012, after increased by 28.1% in 2011. Major export items included telecom equipment and parts (US$27 million, 29.6% of total), engines, motors and parts (US$15 million, 16.5% of total), and jewellery (US$13 million, 13.6% of total).

On the other hand, Hong Kong's imports from Qatar went up by 301% to US$150 million in 2012, after the growth of 74% in 2011. Of the major imports, petroleum oils (other than crude) topped the list (US$124 million, 82.8% of total), followed by polymers of ethylene in primary forms (US$21 million, 14.0% of total).

 

2011

2012

US$ million

Growth (%)

Ranking

US$ million

Growth (%)

Ranking

Total Exports

68

+28.1

78

93

+37.3

75

Domestic Exports

3

+16.2

53

3

-4.7

57

Re-exports

65

+28.7

77

90

39.2

75

Imports

37

+74.0

71

150

+301

52

of which re-exported

22

+42.2

74

116

+417.2

49

Total Trade

105

+41.4

83

243

+131.3

63

Trade Balance

30

-

-

-57

37.3

 

Source: Census & Statistics Department, Hong Kong
^ Since offshore trade has not been recorded by ordinary trade figures, these numbers do not necessarily reflect the export business managed by Hong Kong companies.

Content provided by Picture: Jacqueline Yuen