Qatar Economic Structure

Prior to Qatar’s discovery of oil in 1940, the country’s economy was primarily focused on fishing and pearl diving. While oil exploration was temporarily discontinued due to World War II, the resumption of its activities in 1946 and the start of oil exportation in 1949 transformed Qatar’s dormant society and economy into a thriving marketplace.

Prior to Qatar’s discovery of oil in 1940, the country’s economy was primarily focused on fishing and pearl diving. While oil exploration was temporarily discontinued due to World War II, the resumption of its activities in 1946 and the start of oil exportation in 1949 transformed Qatar’s dormant society and economy into a thriving marketplace.

Despite a period of rapid growth between the ’50s and ’70s, Qatar’s reliance on oil caused it’s economy to face a downturn during the ’80s to mid ’90s due to falling oil prices and reduced oil earnings. Qatar’s economy eventually recovered during the late ’90s, and has since boomed.

Today, Qatar leads the world in real GDP growth rate, industrial production growth rate as well as GDP per capita. It also enjoys one of the lowest unemployment rates in the world of 0.5 percent, and is the second freest economy in the Middle East behind Bahrain according to the 2011 Economic Freedom Index.

Since 1980, the Qatari Riyal has been pegged to the US Dollar at 1USD to 3.65QR. However, this fixed exchanged rate was only made official in July 2001.

Qatar’s Economic Geography

Qatar’s economic success contradicts its physical size. The smallest member of OPEC, both in land area and population, it’s also the third smallest state in the Middle East, behind Bahrain and Lebanon.

Qatar is a peninsula attached to Saudi Arabia and located in the Persian Gulf. Its capital, Doha, is situated in the east on the Persian Gulf and is home to 80 percent of Qatar’s population. The Salwa International Highway links Doha to Saudi Arabia, and upcoming Bahrain-Qatar Friendship Causeway will also facilitate transport between two of the largest financial centres in the Middle East.

As part of its economic plan, Qatar’s major industrial and urban developments have been built around its major oil refineries and seaports. The principality of Mesaieed for example, contains Mesaieed Industrial City, which houses family accommodation as well as the main offices of Qatar Petroleum, Qatar Fertiliser Company, Qatar Steel, Qatar Petrochemical Company, Qatar Vinyl Company, Qatar Chemicals Company, and Qatar Aluminium.

Qatar’s Population and Labour Force

Qatar’s population in 2010 was 1.7 million people. Where have been no official statistics to provide precise numbers, survey estimates indicate that nearly three-quarters of Qatar’s 1.7 million population in 2010 were foreign nationals with temporary residence status.

Foreign nationals also represented a large majority of Qatar’s 1.202 million strong labour force. According to a 2008 report by Qatar’s General Secretariat for Developmental Planning, 93 percent of the labour force were Non-Qataris.

In order to control the large influx of expatriate workers, Qatar introduced the “Qatarization” programme in 2000, whereby government departments and joint venture industries were encouraged to fill high-level positions in their organisations with Qatari citizens. As a result, a growing number of foreign-educated Qataris returned home to fill up key positions formerly occupied by expatriates.

This has caused tensions between the local and expatriate community as expatriates working in the public sector were not only forced out of jobs, but also had less employment opportunities in public sector jobs that promised to triple salaries of the private sector.

There has also been an increasing level of segregation between the public and private sector. According to 2007 data by the Qatar Statistics Authority, 89 percent of Qataris in the labour force worked in the public/government sector, compared to 6 percent in the private sector. The remaining 5 percent worked in other sectors, comprised of companies with both government and private ownership. The situation for non-Qataris was entirely reversed with 88 percent in the private sector, 9 percent in the public sector and 3 percent in other sectors.

Qatar’s Industry Sectors

Qatar has a highly industrialised economy with 78.8 percent of its GDP composition in 2010 from the industry sector. The service sector on the other hand only made up 21.1 percent of Qatar’s GDP, while agriculture contributed 0.1 percent.

Qatar’s industries include:

• Crude oil production and refining
• Ammonia, fertilizers and petrochemicals
• Steel reinforcing bars and cement
  
• Commercial ship repair

 

The economic downturn that Qatar faced during the ’80s to mid ’90s exposed the country’s overdependence on the oil industry. Since then, Qatar intends to reduce it’s reliance on oil through a three-fold process:

• Maximise the potential of its natural gas industry while producing a trickle-down effect,
• where core competencies and competitive advantages gained from oil and natural gas industries can be transferred into other industries.
• Expand the service sector, particularly finance and tourism.

The Qatar Financial Centre established in 2005 provides a world class financial and business centre for international financial service institutions and major multi-national corporations. Qatar’s successful bid to host the 2022 Football World Cup has also increased Qatar’s global profile and bring an influx of tourists to the country during the event.