Qatar Economy Presses on Despite Low Oil Prices

Infrastructure projects keep Qatar’s economy afloat in the wake of low oil prices, according to AFP. The government is spending lavishly for the 2022 World Cup event, including massive railway and reservoir construction projects.

According to the Qatar National Bank, the economy will grow 4.7 percent in 2015 and roughly 6.4 percent in the next two years due to infrastructure spending. The combination of lower energy revenue and greater investment spending expects to produce a smaller fiscal deficit, and the rise in oil prices in 2017 will procure an economic surplus.

Infrastructure projects keep Qatar’s economy afloat in the wake of low oil prices, according to AFP. The government is spending lavishly for the 2022 World Cup event, including massive railway and reservoir construction projects.

According to the Qatar National Bank, the economy will grow 4.7 percent in 2015 and roughly 6.4 percent in the next two years due to infrastructure spending. The combination of lower energy revenue and greater investment spending expects to produce a smaller fiscal deficit, and the rise in oil prices in 2017 will procure an economic surplus.

Gulf nations such as Qatar recognize that an economy, which is overly reliant on oil and gas, is no longer feasible. Analysts expect oil prices to hover around $55 in 2015 and 2016, rising to $60 a barrel in 2017. Further, greater competition from other oil-producing nations is another reason why diversification is key to securing a stable economy.

The Qatari government maintains that investment will continue to propel the economy forward, despite slowdowns in public spending from neighbors such as Saudi Arabia.

Gulf Diversification

The Kingdom remains in a predicament, as officials slash spending and offer more bonds to make up for budget gaps stemming from crude market volatility and ongoing war efforts against Huthi rebels in Yemen. The Saudis must also keep oil production at current levels to maintain economic cohesion while preventing social and political instability. The Saudi monarchy knows that diversification is necessary for the future, but its neighbor Qatar is ahead of the game and surviving in an unfriendly energy climate.

The Qataris are in a better position than their Saudi counterparts are, remaining on steady ground with high savings and low public debt. Qatar is also undergoing a population surplus, but inflation expects to remain low, especially in the housing sector, where more housing complexes keep housing inflation at bay.

Workforce Blemish

Qatar is faring well domestically, but the Gulf country faces a massive PR problem. The World Cup is a major source of investment for the Qataris, even though horror stories of work-related deaths mire the nation’s workforce. Critics note the deplorable conditions that migrant workers must contend with, including allegations of working employees to death. Human rights activists cite Qatar’s kafala system, which essentially allows employers to hold passports and exit visas, disallowing workers from the leaving the country.

Migrants have also complained of false wage advertising and not receiving pay for their work. Qatar has vowed reform, especially in the area of exit visas. Qatar’s workforce is comprised of overseas migrants by 90 percent, with many workers coming from such places as Nepal, Egypt and Pakistan. Qatar faces a giant hurdle when so much of its infrastructure and investment aspirations are contingent upon migrant workers who face deplorable circumstances, and it is an unsustainable problem as international outrage grows.