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Qatar: Market Profile

Major Economic Indicators

 

2011

2012

2013

Population (million)

1.7

1.8

2.0

GDP (US$ billion)

171.5

192.4

202.6*

GDP Per Capita (US$)

100,410

104,756

100,261*

Real GDP Growth (%)

+13.0

+6.2

+6.5

Inflation (%)

+1.9

+1.9

+3.1

Exports of Goods (US$ million)

114,299

132,968

127,190*

Export (% change)

+58.7

+3.2

-4*

Imports of Goods(US$ million)

26,926

30,787

35,619*

Import (% change)

+28.6

+21.2

+16*

Exchange Rate (Riyal : USD)

3.64

3.64

3.64

Source: IMF, EIU, Qatar Ministry of Development Planning and Statistics
* IMF, EIU estimates

Recent Developments

  • Qatar’s economy expanded by 6.5% in 2013 on the back of the growth in the non-oil sector, and is projected to rise by 5.9% and 7.1% in 2014 and 2015 respectively due to massive infrastructure investment and further economic diversification.
  • In the run-up to the 2022 FIFA World Cup, plus its bid for hosting the 2024 Olympics, large-scale infrastructure projects are underway, including the construction of stadiums, rail connection and highways. The government plans to spend up to US$ 205 billion on infrastructure over 2013-2018.
  • Hong Kong's exports to Qatar grew by 3.3% to US$96 million in 2013, while imports from Qatar went up by 41.5% to US$212 million.

Current Economic Situation

Qatar’s real GDP grew by 6.5% in 2013 on the heels of a 6.2% growth in 2012. The country’s economy is driven more by the non-oil sector, which expanded by 11.4% in 2013. Double-digit growth was seen in the construction, finance, real estate and business services, as well as trade and hospitality sectors. The share of non-oil sector in the country’s GDP increased from 42% in 2011 to 59% in 2013, with the construction sector rising 13.6% as infrastructure building accelerated. The IMF expects the Qatari economy to expand by 5.9 % in 2014, supported by massive public investment for the 2022 FIFA World Cup and further economic diversification.

In the run-up to the World Cup 2022, plus the Qatari bid for hosting the 2024 Olympics, the government plans to spend up to US$205 billion over 2013-2018 on infrastructure projects. Massive infrastructure projects are underway including the construction of stadiums, rail connection and highways. To strengthen its tourism capacity, Qatar plans to increase the number of hotel rooms from the current 15,000 to 95,000 in 2022. By 2018, 21 new hotels will be added in Doha, the capital of Qatar. Further, the Qatar Tourism Authority (QTA) plans to invest US$17 billion on tourism-related infrastructure projects over the next five years, projecting the GDP share of travel and tourism will rise from 0.7% in 2011 to 6.4% in 2021.

Qatar has been the world’s largest liquefied natural gas (LNG) exporter since 2006, boasting the world’s third largest proven gas reserves (2012), following Russia and Iran. Qatar Petroleum (QP), the national oil and gas company, is responsible for developing the country’s LNG sector from upstream to downstream, including exploration, production, storage and marketing. QP is active in partnering with international oil companies, which purchase LNG from the projects that they have invested in Qatar (e.g. ExxonMobil). Japan, the world’s top LNG buyer, has increased LNG imports from Qatar since the Fukushima nuclear disaster of 2011, with many multi-year supply contracts signed.

After completing the LNG investment programme in 2011, Qatar has started to concentrate on downstream energy sectors. While the Ministry of Energy and Industry noted that Qatar will spend US$25 billion to raise the current LNG output from 9.2 million tonnes per year (mty) to 23 mty by 2020, the new long-term strategy will help further diversify the economy and reduce gas dependency.

Thanks to its huge natural gas reserves, Qatar’s per capita income of US$104,756 ranked as the world’s highest in 2012. The government aims at utilising the enormous oil wealth to develop a sustainable economy. In its National Vision 2030 development plan, the government is dedicated to building a services-oriented knowledge economy through investment in infrastructure, education and healthcare.

Qatar uses its trade surplus accumulated from oil and gas wealth to establish the Qatar Investment Authority (QIA). In February 2014, the QIA indicated that the fund had about US$110 billion in assets under management. The QIA and its subsidiaries invest in leading companies in non-oil sectors, such as hotels, retail, real estate and manufacturing, in the hope that their experience can help lift Qatari standards and diversify the economy.

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. Al Jazeera has broadcast centres in Doha, Kuala Lumpur, London and Washington DC, making it a Middle Eastern broadcaster with a global reach.

In the Global Competitiveness Report 2013-2014 published by the World Economic Forum, Qatar ranked 13th out of 148 economies, and took the top spot of being the most competitive economy in the Middle East region. Qatar’s strong competitiveness is underpinned by its high efficiency of public institutions and goods market, with these categories ranking globally 2nd and 3rd respectively.

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. According to the WTO, Qatar‘s simple average most favoured nation (MFN) applied tariff was set at 5.5% for agricultural goods and 4.6% for non-agricultural goods in 2012.

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 alcohol. Imports of pork and pork products had been prohibited until 2012. The Qatar Distribution Company (QDC), a subsidiary of the national air carrier Qatar Airways, has been granted the sole authority to import pork and alcohol products.

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, 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%.

Hong Kong's Trade with Qatar

Hong Kong's total exports to Qatar grew by 3.3% to US$96 million in 2013, after increased by 37.3% in 2012. Major export items included telecom equipment and parts (US$39 million, 40.5% of total), jewellery (US$15 million, 15.5% of total), watches and clocks (US$10 million, 10.3% of total).

On the other hand, Hong Kong's imports from Qatar went up by 41.5% to US$212 million in 2013, after the growth of 301% in 2012. Of the major imports, petroleum oils (other than crude) topped the list (US$165 million, 77.8% of total), followed by polymers of ethylene in primary forms (US$31 million, 14.5% of total).

 

2012

2013

Value
(US$ million)

Change
(%)

Ranking

Value
(US$ million)

Change
(%)

Ranking

Total Exports

93

+37.3

75

96

+3.3

77

Domestic Exports

3

-4.7

57

10

+284.8

33

Re-exports

90

39.2

75

86

-5.2

81

Imports

150

+301

52

212

+41.5

49

of which re-exported

116

+417.2

49

207

+78.8

43

Total Trade

243

+131.3

63

308

+26.9

58

Trade Balance

-57

37.3

 

-117

 

 

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