Qatar’s economy among the fastest-growing in the world
Natural gas reserves have made Qatar’s economy among the fastest-growing in the world. Last year the economy grew by 18 percent, and in 2011 the International Monetary Fund (IMF) expects growth to reach 20 percent. Qatar became the world’s top liquefied natural gas (LNG) exporter in 2007, bolstering the national budget, trade surpluses and foreign reserves. Oil and gas output are predicted to remain at current levels for at least the next 20 years, although recent worries about over-extraction of gas have crept in.
Qatar’s budgetary break-even point is estimated at $24 per barrel, according to the IMF – much lower than other Gulf states. The country also holds a substantial offshore portfolio, estimated to be worth about $40 billion, and debt levels are low. Qatar returned to annual inflation in December 2010 after at least 11 months of deflation of 2.4 percent. Consumer prices had fallen 4.9 percent in 2009.
Qatar will continue to try to diversify its economy, particularly after its successful bid to host the 2022 World Cup, but the bulk of private and foreign investment will be focused on the energy sector. Risk ratings suggest that Qatar is creditworthy and at low risk of external default.
The US has an extensive military presence in Qatar, putting it at significant risk of a terrorist attack. While this makes it difficult for the country to disentangle itself from American policy in the region, the Emir is expected to continue to give priority to mediation efforts, boosting Qatar’s standing in diplomatic circles.
Qatar, which has taken on a role as mediator, tried unsuccessfully to resolve a political stand-off in Lebanon, and has also begun to engage Iran, as the two countries explore common ownership of the North Field/South Pars gas reserve and their mutual interest as gas exporters. Domestically, scant attention will be paid to political reform in the coming years. However, World Bank indicators, especially those regarding the rule of law, suggest that Qatar’s governance framework is reasonably well developed by global and regional standards.