Energy Fuels Qatar's Incredible Growth and Wealth
Talk about your port in the storm.
While the rest of the world wallows in economic turmoil and crippling deficits, the Persian Gulf nation of Qatar can’t spend money fast enough—literally.
For the current fiscal year, the gas-rich nation projects a record budget surplus of $6.1 billion, despite the reported $38.4 billion it has earmarked for expenditure.
That's a 19 percent jump from 2010, which is mostly slated for infrastructure projects that include the ongoing construction of its airport in the capital city of Doha, the creation of a new port and field studies to build a railway.
Qatar, which won a bid late last year to host the 2022 World Cup, also projects 20 percent economic growth for fiscal 2011, up from 16 percent in 2010.
Needless to say, the global community is taking notice.
For many, though, the peninsular nation, an important ally of the United States in the Middle East, is unfamiliar territory.
Whether you’re interested in possible business ventures, investment opportunities or just plain curious about the wealthiest country in the world, the following frequently asked questions should help fill in the blanks.
How Big is Qatar?
The Arab country of Qatar, pronounced “cutter”, is a tiny peninsula that juts out into the Persian Gulf, bordered by Saudi Arabia to the south. With a total land area of 4,416 square miles and a small coastline of 345 miles, it is roughly the size of Connecticut.
Qatar is one of the six Arab nations that comprise the Cooperation Council for the Arab States of the Gulf — including Bahrain, Saudi Arabia, Oman, Kuwait and the United Arab Emirates.
According to The World Factbook by the U.S. Central Intelligence Agency, Qatar has an estimated population of 848,016 in 2011, but nearly 75 percent are expatriates with temporary status who work in the oil industry. Most of its residents live in the capital city of Doha.
How is Qatar Governed?
Qatar is an Arab emirate, meaning a political territory ruled by the head of state, the Amir. A constitutional monarchy, it has been governed by the ruling Al Thani family since the mid 1800s.
Politically, the State Department notes Qatar is evolving from a traditional society to one based on more formal and democratic institutions to meet the requirements of social and economic progress. While its constitution formalizes the hereditary rule of the Al Thani family, it also establishes an elected legislative body and makes government ministers accountable to the legislature.
The Al Jazeera satellite television station based in Qatar, which is the first and only free broadcast source in the Arab world, is perhaps the biggest example of the country’s efforts to modernize.
Are They Really that Rich?
In a word, yes. Buoyed by oil and natural gas revenues, Qatar has the highest per capita income in the world at an estimated $143,300, followed by Liechtenstein, at $141,100, and Luxembourg at $81,800, according to The World Factbook.
It sits on the third-largest proven reserve of gas, exceeding 900 trillion cubic feet — 14 percent of the world’s total. The nation also shares with Iran the largest single non-associated gas field in the world, the North Field.
Oil and gas account for more than 70 percent of total government revenue, more than 50 percent of its gross domestic product and roughly 85 percent of export earnings, according to The World Factbook.
Until oil exports began after World War II, Qatar’s main sources of revenue were pearling, fishing and trade.
What is Qatar's Economic Outlook?
As the world’s largest producer of liquefied natural gas (LNG), Qatar’s economic growth has been nothing short of incredible, averaging 15 percent per year. Due to the rising price of crude oil, the State Department estimates Qatar’s 2010 nominal gross domestic product, the total market value of all its goods and services, to be $128 billion, up 19 percent from 2010.
Proven oil reserves of 15 billion barrels “should enable continued output at current levels for 37 years,” The World Factbook notes, adding the country’s successful 2022 World Cup bid “will likely accelerate large-scale infrastructure projects such as Qatar’s metro system and the Qatar-Bahrain causeway.”
More on Qatar
Is it Safe to Visit Qatar?
Calling ties between Qatar and the U.S. “excellent,” the State Department indicates Qatar is among the safest and most politically stable places to travel to in the Middle East. U.S. citizens must carry a passport, along with a visa, which can be purchased upon arrival at the Doha International Airport. The country does not allow individuals with HIV/AIDS to enter, however, and a medical exam is required for all long-term visitors and residents.
Likewise, many Qataris also travel to the U.S. to earn their college degrees, while others attend universities that have set up branch campuses in Qatar, including Cornell University, Carnegie Mellon University, Texas A&M and Northwestern.
While violence in Qatar is rare due to the country’s large police presence, the U.S. State Department warns that attacks against Western targets have occurred, including the 2005 suicide bomber attack at a theater in Doha that was regularly frequented by westerners. The Bureau of Consular Affairs maintains current travel warnings and travel alerts on its Web site.
U.S. citizens in Qatar are “strongly encouraged to maintain a high level of vigilance, be aware of local events, and take appropriate steps to bolster their personal security at all times,” the State Department said. They are also strongly encouraged to avoid labor or work camps, “where unrest can occur due to local working conditions or labor grievances.”
Should my Portfolio Include Exposure to Qatar?
Not for the average investor, no, says Gregg Wolper, senior mutual fund analyst for Morningstar. “All emerging markets have higher risks than bigger developed markets because their stocks are often more difficult to trade and there could be increased risk of political instability,” he says.