The State of Qatar was created on 1 September 1971 following the termination of the treaty of protection between the UK and the ruler of Qatar which established the country’ separate existence for the first time in 1916. It occupies a peninsula extending about 99 miles from the eastern flank of Arabia and has a land area of 4,400 square miles, about the size of the US state of Connecticut, most of it comprising sandy desert. Its coastline is almost 400 miles long and Qatar has extensive though still largely undefined territorial waters where the bulk of its hydrocarbon wealth is located. Its territory includes several islands, the largest being Halul island, which is east of the peninsula and used for oil storage. Qatar has a land border with Saudi Arabia and a sea border with Bahrain, the UAE and Iran.

Qatar until 1916

Humanity first arrived in Qatar about 50,000 years ago. Evidence has been found of human settlements created about 5,000 years ago. The ruling Al-Thani clan, a bedouin group, arrived in Qatar in the early 18th century, possibly as the result of a drought that devastated traditional watering and grazing grounds in central Arabia. They eventually settled in Doha in 1847 and made it their capital. Qatar was treated as being party to Britain’s General Treaty of Peace signed by the rulers of the southern Gulf in 1820.The people of Qatar conformed with the puritanical strand of Islam championed by the Al-Saud clan of what is now Saudi Arabia and declared its allegiance to Riyadh in 1851. Control of Qatar was disputed by the Al-Khalifa of Bahrain who held the north of the peninsula and attacked Doha and neighbouring Wakra in 1867. Britain intervened to impose a settlement and signed a treaty guaranteeing maritime peace with the Al-Thani in 1868. This was the first time the Al-Thani emerged as claimants to rule Qatar. In 1871, Ottoman troops occupied Doha in an effort to assert Constantinople’s longstanding claim on Qatar. The unratified agreement between the UK and the Ottomans of 1913 placed Qatar within Britain’s sphere of influence. The Ottomans withdrew their garrison from Doha in August 1915 during the 1st World War. In November 1916, Doha signed an exclusive agreement with the UK that put Qatar on a similar footing as the Trucial States (what is now the UAE), Bahrain and Kuwait.

The discovery of oil and independence

An oil and gas exploration concession was awarded to the Anglo-Persian Oil Company (APOC) – now BP — in 1935. This was subsequently transferred to Petroleum Development (Qatar), a subsidiary of the Iraq Petroleum Company (IPC). This was the joint venture created in 1929 to develop oil in territory that had previously been part of the Ottoman Empire. It was then owned by APOC, Shell, CFP (now Total) of France, US oil companies including what is now Exxon, and Calouste Gulbenkian. Oil was struck in the onshore Dukhan field close to Qatar’s west coast in December 1939. Exports started in June 1948. An offshore concession was awarded in 1949 and acquired by Shell in 1952.

Qatar established 50:50 revenue sharing with international oil companies in 1953 and joined OPEC in 1961. The first offshore discovery was made in 1963. Full nationalisation of the onshore concession was achieved in September 1976. Shell’s offshore concession was fully acquired in February 1977. Since then, oil and gas has been produced solely by Qatar’s national oil company, now named Qatar Petroleum, either directly or in agreements, rather than through concessions, with international oil companies.

In 1968, the UK announced it was closing all its military bases east of the Mediterranean and this called into question its protection treaties with Gulf rulers. Initial plans called for a federation to be created including what are now the UAE, Bahrain and Qatar. Differences between the ruling families of Bahrain and Qatar made that impossible. Iran threatened to annex Bahrain, over which it had historic claims, if it attempted to join the nine-member federation. Bahrain became independent in August 1971 and Qatar followed suit three weeks later. The UAE was founded in December 1971. Qatar’s security was guaranteed by the UK in a new treaty.

From independence to prosperity

Qatar at independence, despite its oil wealth, was one of the most underdeveloped parts of Arabia and had a population of just over 100,000 people, the majority non-Qataris including significant numbers of Palestinian refugees. Sheikh Khalifa replaced his father Ahmed as emir in February 1972 with the mandate of modernise the country. He appointed a foreign minister and made his son, Hamad (the future emir), commander in chief of the armed forces. Following the nationalisation of the oil industry, production-sharing agreements were signed. Shell had discovered the North Field, the world’s largest non-associated gas field, in 1974 but did not develop it. Qatar finally decided to exploit the field in 1980. Production started in 1991. LNG exports started five years later. Qatar is now the Middle East’s largest gas exporter. Gas has made the country one of the world’s wealthiest. Its population is now approaching 2.5 million people, though only about 10 per cent are Qatari nationals.

Sheikh Hamad replaced his father in June 1995. This triggered open disputes with Saudi Arabia and Abu Dhabi, who called for Sheikh Khalifa to be restored, and with Bahrain, which had an unresolved claim over the territorial waters and islands between Bahrain and Qatar. After a counter-coup supported by Saudi Arabia and Abu Dhabi failed in February 1996, negotiations produced a sustainable agreement involving Qatar’s neighbours. Borders with Bahrain and Saudi Arabia were finalised in 2001.

Qatar’s response to Arab uprisings that erupted in 2011 was a source of further tensions with GCC states. Qatar provided political and financial support for the Muslim Brotherhood, which won elections in Egypt in 2012, and supported Islamist groups in Libya and Syria. It also provided a haven for anti-government dissidents from Bahrain. Saudi Arabia and other GCC states denounced the brotherhood and supported the coup that brought President El-Sisi to power in 2013. The reporting of events in the region by Al Jazeera, the government-owned satellite TV station based in Doha, was also denounced by Riyadh and Bahrain. In March 2014, Bahrain, Saudi Arabia and the UAE withdrew their ambassadors from Doha, alleging that Qatar had been meddling in their internal affairs. They returned in November 2014 following negotiations.

A turning point in relations with Qatar’s neighbours came in June 2013 when Sheikh Hamad announced he was abdicating in favour of his son Sheikh Tamim, crown prince since 2003. This was the first time in the modern history of Arabia that a head of state voluntarily relinquished power. A new government was appointed. The most significant change was the departure of Sheikh Hamad Bin Jassim al-Thani, Qatar’s prime minister and foreign minister, who was deemed to be the inspiration behind actions that outraged GCC states, Egypt and Jordan. Saudi Arabia’s King Abdullah subsequently met the new emir in a sign there would be a new understanding between Riyadh and Doha. Qatar has since shown an increased willingness to work with the kingdom. In September 2015, it announced it would provide troops to the Saudi Arabia-led coalition fighting to restore Yemen’s President Hadi.

Qatar since 1995 has sought to define itself as a different kind of GCC state. In 2003, it adopted a written constitution that provided for an elected consultative assembly. Elections to the assembly were due to have been held in 2013, but this was postponed as a result of the change of emir. The term of office of the appointed advisory council, also provided for by the constitution, has been extended to 2016. It is as yet unclear whether elections will then be held. Qatar has credibly declared itself to be supporter of freedom of expression, religious tolerance and women’s rights.

Financed by massive increases in export earnings due to soaring gas production, Qatar has embarked on a comprehensive infrastructure investment programme that will culminate with the completion of facilities needed to host the 2022 FIFA World Cup Finals, which it was appointed to host in 2010. The decision has proven to be the most controversial in the history of world football. Qatar has been the target of unsubstantiated allegations that it bribed FIFA and more valid claims that foreign workers are being mistreated. Qatar, nevertheless, has withstood the storms about its regional political position and resentment about its emergence as one of the wealthiest countries on earth and continues to assert its determination to deliver the FIFA World Cup finals as it was mandated to do. The event will take place in November/December 2022.

The government of Sheikh Tamim

Sheikh Tamim, born in 1980, is the fourth son of the former emir Sheikh Hamad and the second son of Sheikha Mozha Bint Nasser al-Missned, the former emir’s second wife and the first Qatari woman to be awarded a university degree. After public school in the UK, he graduated from Sandhurst Military College in 1998. Sheikh Tamim subsequently joined Qatar’s armed forces. He first came to prominence as chairman of the Doha Asian Games held in 2006. Sheikh Tamim is reported to be close to the Muslim Brotherhood, though he is also viewed as pragmatic and pro-Western. In July 2014, he renewed the defence agreement with the US and confirmed Qatar’s cooperation with the Combined Air Operations Center (CENTCOM) which has been based al-Udeid air base since 2003. Sheikh Tamim also signed a military cooperation agreement with Turkey in December 2014. He is an outspoken supporter of the rebellion against the government of President Asad in Syria. Sheikh Tamim has eight children by three wives.

Prime Minister Sheikh Abdullah Bin Nasser, born in 1965, is fourth cousin of Sheikh Tamim. He graduated from military college in the UK in 1984 and has a degree from Beirut Arab University. He served in the Qatar armed forces and was promoted brigadier general in September 2004. Sheikh Abdullah was appointed minister of state for interior affairs in 2005 and Minister of Interior when he became prime minister in 2013. He is also chairman of the Supreme Committee for Delivery & Legacy for the 2022 World Cup Finals.

Deputy prime minister Ahmad al-Mahmoud was appointed to his position in 2011. A member of a cadet branch of the Al-Thani clan, Al-Mahmoud was previously a diplomat.

Foreign Minister Khalid al-Attiyah joined Qatar’s government in 2011 as minister of state for foreign affairs. He replaced Shaikh Hamad Bin Jassim as foreign minister when Sheikh Tamim became emir. Al-Attiyah, a member of the extended Al-Thani clan, was previously a fighter pilot, lawyer and businessman.

Finance Minister Ali al-Emadi was previously chief executive of government-controlled Qatar National Bank, (QNB),  the Middle East’s largest bank. Energy & Industry Minister Mohammed al-Sada has a PhD from the Manchester Institute of Technology and spent his entire at QP. He took over as energy minister in 2011 and was reappointed in the 2013 reshuffle.

There is a high degree of continuity in the policies and programmes pursued by Sheikh Tamim and no evidence of major departures from the vision developed by his modernising father. A new generation of policymakers has been introduced since the summer of 2013 and its clearest expression is in the restructuring of QP. But the previously stated objectives — hosting the 2022 World Cup Finals and delivering Qatar’s 2030 vision – are being pursued.

A higher degree of subtlety is discernible in Qatar’s regional policies. Sheikh Tamim has worked to restore relations with Riyadh and reduce tensions with Abu Dhabi and Bahrain. There is as yet, however, no evidence of détente with the government of President El-Sisi of Egypt, where Qatar is widely reviled for its support for the Muslim Brotherhood and the reporting of events in Egypt by Al Jazeera. There are no signs of meaningful domestic opposition to Sheikh Tamim and he can confidently expect to lead Qatar for at least a generation.  His position is comprehensively underpinned by Qatar’s oil and gas resources and the prosperity it has brought to the people of Qatar.

The economy of Qatar

The economy of Qatar largely depends upon the production and export of oil and gas. According to the annual BP Statistical Review, Qatar had proven crude oil reserves in 2014 of 25.7 billion barrels, the seventh largest in the Middle East and equivalent to 1.5 per cent of the world total. Qatar’s gas reserves, principally in the offshore North Field – the world’s largest non-associated gas field , total 866 trillion cubic feet. This is the third largest on earth.

Source: BP Statistical Review, 2015


Proven oil reserves (bn barrels) Proven gas reserves
Saudi Arabia                                        267 Iran                      1,201
Iran                                        158 Russia                      1,152
Iraq                                        150 Qatar                        866
Kuwait                                        102 US                        345
UAE                                          98
Libya                                          48
Qatar                                          26


Producing and exporting oil and gas has helped make Qatar become one of the Middle East’s largest economies. According to IMF estimates, Qatar last year had a GDP worth $210bn, the seventh largest in the region and the third largest in the GCC after Saudi Arabia and the UAE (see Chart 3).  Qatar that year had the highest GDP per capita in the Middle East and one of the world’s highest at $94,000 (see Chart 4)

Source: IMF World Economic Outlook database, October 2015

GDP per capita                                                                        GDP ($bn)

Qatar 93,965.18 Saudi Arabia 752.459
UAE 43,179.78 Iran 404.132
Kuwait 43,103.34 UAE 401.647
Bahrain 28,271.75 Egypt 286.435
Saudi Arabia 24,454.02 Iraq 221.13
Oman 19,001.81 Algeria 214.08
Lebanon 11,067.80 Qatar 210.002
Libya 6,623.11 Kuwait 172.35
Iraq 6,164.62 Morocco 109.201
Algeria 5,531.79 Oman 77.755
Jordan 5,357.76 Lebanon 49.919
Iran 5,183.27 Tunisia 48.553
Tunisia 4,414.81 Yemen 43.229
Egypt 3,303.75 Libya 41.148
Morocco 3,291.25 Jordan 35.765
Yemen 1,574.25 Bahrain 33.862


Oil and gas production and processing accounted for 49 per cent of Qatar’s GDP in 2014. The largest non-oil sector is banking, finance, insurance and real estate with a total of 14 per cent of Qatar’s GDP in 2014. Non-oil manufacturing accounted for 10 per cent of GDP that year.


Oil and gas The performance of the Qatari economy has been driven principally by rising LNG exports since the first shipment of gas in 1996. This has been conditioned by trends in Qatar’s oil production which reached a peak of 800,000 b/d in 2005 but has since been in decline. It is expected to fall to 650,000 b/d in 2015. These trends have been amplified by developments in global oil and gas prices.

World oil prices have experienced their sharpest ever fall since the summer of 2014 and they are almost 50 per cent lower than in June last year. This is the result of soaring non-OPEC production, particularly in the US, and the expectation that rising oil exports by Iran and Iraq will lead to intensifying intra-OPEC competition for market share. The IMF’s most recent forecast of Gulf oil export prices has revised down the projected price in 2016 to around $50 a barrel. It forecasts a modest rise in Qatar’s oil export price to about $65 in 2020 (see Chart 6).


The IMF’s Article IV report published in April forecast that Qatar’s crude oil production will steadily decline to about 530,000 b/d in 2020. Domestic oil consumption, mainly for road transport use, is now about 200,000 b/d and is expected to grow by about 5 per cent a year to about 250,000 b/d in 2020. This suggests that crude and refined exports will fall from about 450,000 b/d in 2015 to about 280,000 b/d in 2020.

Crude oil production (thousands of barrels per day)

2011      2012    2013    2014   2015F  2016F  2017F   2018F  2019F  2020F

744.7     732.1   697.8    670.0  655.0  640.0   625.0    592.6    557.3  529.4


LNG exports, which reached their 77 million tonnes a year capacity in 2011, are forecast to edge slightly higher to 78 million tonnes in 2020. The result is that the structure of earnings from hydrocarbon exports will change significantly in the next five years (see Chart 7).

Total hydrocarbon export earnings reached a peak of about $130bn in 2013 and edged lower on reduced oil production and exports in 2014. The slump in oil prices coupled with further falls in oil production and exports is expected to cause hydrocarbon export earnings to fall by about 40 per cent to around $71bn in 2015. The IMF forecasts there will be a further decline in hydrocarbon export earnings in 2016 due to lower exports, and a slow recovery thereafter as higher export prices offset lower oil and refined product exports. LNG has accounted for the majority of Qatar’s hydrocarbon exports since the end of the last decade. Due to lower oil prices and oil and refined export earnings, LNG is expected to account for around 60 per cent of hydrocarbon export earnings in 2015. Gas prices, which lag world oil prices, are expected to continue falling in 2016 and this will cause LNG’s share of hydrocarbon export earnings to fall to about 47 per cent of the total. The IMF forecasts that LNG’s share of hydrocarbon exports will rise to almost 50 per cent in 2020 (see Chart ).


Chart 8

Qatar: hydrocarbon export earnings, 2011-20 ($bn)

Source: IMF Article IV Report, April 2015

Crude oil
Refined products
Propane and butane


Growth to 2020

Qatar’s rate of growth in the years to 2020 is expected to be significantly lower than in 2003-13 due to:

  • the fact that LNG production and exports have reached capacity and there are no plans for further investment in more gas export facilities
  • falling oil production coupled with lower oil prices.

These two factors are combining to mark the start of a new era for the Qatari economy in which non-oil production will be the principal source of growth. Qatar’s GDP at current prices grew by 800 per cent in the nine years ending 2011. It grew at less than 5 per cent at current prices in 2012 and 2013. GDP contracted by 2 per cent in 2014 and is projected to fall by about 10 per cent this year due to lower oil production and prices. The IMF forecasts GDP at current prices will grow by an average of 6 per cent a year in 2016-20 (see Chart 9). Growth in this period will mainly be due to non-oil activities largely driven by investment in infrastructure, the expansion of air and sea traffic through Qatar’s new Hamad International Airport and Hamad Port and a rapid growth in Qatar’s population ahead of the 2022 World Cup Finals. The IMF forecasts that non-hydrocarbons will account for 70 per cent in GDP in 2020 (see Chart 10).

Chart 9

Qatar: GDP at current prices (QRbn)

Source: Qatar Central Bank and IMF

GDP (QRbn)
Growth (%)


Chart 10

Qatar: GDP by sector, 2011-20(QR bn)

Hydrocarbon GDP
Non-hydrocarbon GDP

Inflation Qatar experienced inflationary pressures before the financial crash of 2008 but has recorded manageable price increases since 2009 (see Table 1). Nevertheless, there is evidence that rising demand is driving up consumer prices. Shortages of some building materials could produce a substantial increase in wholesale and building material prices.


The budget Reflecting soaring LNG production, the government of Qatar enjoyed a remarkable increase in its income from oil and gas production from the mid-1990s. This was supplemented by a sharp rise in investment income in the fiscal years 2006/07-2013/14. Its oil and gas income grew by 250 per cent in that period to $55bn in 2013/14. Investment income, which increased robustly as the government deployed its surpluses, rose by 440 per cent in the same period to $28bn.

IMF estimates show the government’s oil income fell by 23 per cent in the year ending March 2015 and that it will fall by a further 33 per cent in 2015/16 on lower oil production and prices and lower gas prices. Investment income is estimated to have reached a peak in 2014/15 and is projected to fall to $28bn in the present financial year as a result of a government draw-down on savings to finance a projected deficit. The IMF estimates investment income will be roughly the same as projected government oil income in 2015/16.

The result is that total government income is estimated to have fallen by around 7 per cent in the year ending March 2015 and is projected by the IMF to fall in 2015/16 to under $70bn. A further fall in government oil, investment and total income is expected in 2016/17 due to lower oil prices and production, lower gas prices and a further drawdown of government savings (see Chart 11). Other government income, including corporate tax, rose by 550 per cent in the six years ending 2012/13. It is projected to account for 20 per cent of government income in 2016/17.

Chart 11:

Qatar government income, 2006/07-2016/17 (QR million)

Oil and gas
Investment revenues
Other revenues
Total revenue

Source: IMF

Soaring government revenue allowed a sharp increase in public spending which rose by 500 per cent in the 10 financial years ending 2012/13 to the equivalent of $45bn. The IMF’s projections show that spending on salaries will account for 25 per cent of the total in 2016/17. Items classified as other spending, the largest item in the budget, include transfers to pension and social funds.

The government of Qatar has had a budget surplus every year since 1999/2000. The surplus hit a peak of 20 per cent of GDP in 2013. Its aggregate surplus in the 15 fiscal years ending March 2015 is estimated to be more than $200bn and this has been invested in domestic and foreign assets. The IMF Article IV report published in April forecast the surplus will fall to almost zero this year. It will average3-4 per cent of GDP in the subsequent five years.


Exports, imports and the balance of payments The rise of LNG exports has totally transformed Qatar’s balance of payments. In 1997, its exports were worth under $4bn. In 2013, they had risen — mainly due to LNG exports that year of 77 million tonnes — to $137bn. They have since fallen back on lower oil prices and production and lower gas prices and are projected to be worth $85bn in 2015 (see Chart 12). Merchandise exports are forecast to rise modestly to around $90bn in 2020.

Imports, including of capital goods needed in Qatar’s LNG, industrial and infrastructure programme, have also risen sharply. In 1997, they were worth $3bn. They are forecast to total $33bn in 2015 and to continue rising by about 5 per cent annually to $40bn in 2020.

Qatar has a structural balance of trade surplus which totalled under $1bn in 1997. At its peak in 2013, the surplus was $105bn. The IMF forecasts it will fall to about $50bn and to remain at that level until 2020.

Qatar is a major importer of services, mainly in the form of labour, and is expected to have a services trade deficit of about $40bn in 2015. Qatar’s surplus in merchandise goods has comfortably exceeded this deficit since 1998 and the current account surplus reached a peak of $63bn in 2013. Its aggregate current account surplus in the 15 years ending 2013 totalled almost $200bn, the highest surplus/GDP ratio in the world in this period.

The IMF forecast is that lower merchandise export earnings in 2015-20 will sharply reduce the surplus which is projected to average $5bn-6bn a year in the period.

These projections suggest that Qatar will continue to be able to accumulate surpluses and defend the parity of the riyal against the dollar

Monetary and exchange rate policy. Since it was created in 1993, the Qatar Central Bank (QCB) has pursued the monetary strategy of targeting the exchange rate. The formal framework for the exchange-rate policy is a fixed parity between the Qatari riyal (QR) and the dollar of$1=QR 3.64 per dollar. The priority of the QCB monetary policy is to keep the riyal stable against the dollar by managing short-term interbank interest rates with a view to sustaining the fixed parity. In 2002, the QCB replaced the repo rate with the overnight lending rate as the main indicator of QCB monetary policy stance. The central bank’s Monetary Policy Committee (MPC) formulates QCB’s monetary policy. It is chaired by the governor.

The QCB has successfully kept the banking system liquid and treasury bill rates generally stable. Domestic credit grew by 10 per cent in 2014. Private sector credit growth accelerated in the year to 20 per cent due to robust demand from contractors, services, traders, and consumers.

Real estate credit has grown in line with the non-hydrocarbon economy. Public sector credit has been contracting, partly due to the close monitoring of public sector borrowing by the Ministry of Finance. Qatar’s banks are well capitalised and liquid. As of September 2014, Tier 1 capital exceeded 15 per cent of risk-weighted assets and non-performing loans (NPLs) were below 2 per cent. The banking system is highly profitable, with a return on assets at 2 per cent. Liquidity buffers are strong. The aggregate loan-to-deposit ratio has held steady at 1. Cross-border assets have grown to about 20 per cent of banks’ assets.

Most Basel III regulations were introduced in 2014. The QCB issued instructions for the loan-to-deposit ratio in mid-2014. The authorities are implementing a strategic plan for financial regulation which calls for a move to risk-based regulation, expanding macro-prudential oversight, strengthening market infrastructure and enhancing consumer and investor protection.


The banking and finance system

The banking and finance system comprises three elements: the commercial banks; the capital market and institutions licensed by the Qatar Financial Centre Authority (QFCA). Following the passing of new laws in 2012, the central bank, the Qatar Financial Market Authority (QFMA) and the QFCA have been working together to harmonise finance sector policies and infrastructure in line with international standards and best practice.

The QCB Law of 2012 established the central bank as the supreme authority with responsibility for the design and implementation of policies relating to the regulation, control and supervision of financial services and markets in Qatar. The QCB Law also introduced specific provisions addressing the licensing and supervision of insurance businesses, consumer protection and customer confidentiality, protection of credit information, regulation of Islamic financial institutions, the merger and acquisition of financial institutions, settlement of disputes, and sanctions for persons who conduct financial services activities without the required licences.

The new QFMA law of 2012 gives the authority wider responsibilities and obligations to supervise and monitor Qatar’s capital markets. These encompass protection of investors; fair and efficient financial markets, transparency, professionalism and efficiency, and penalties for bad behaviour.

Commercial banks There are a total of nine commercial banks incorporated in Qatar. These are supplemented by the branches of regional and international banks. At the end of June 2015, Qatar’s commercial banks had total assets of QR 1,062bn ($292bn), equivalent to 150 per cent of Qatar’s GDP. This is an exceptionally high ratio and reflects the effective role banks are playing in Qatar’s economy and the huge liquidity flows being managed by the banking industry.


Source: Qatar Central Bank

2010 2011 2012 2013 2014 H12015
Total assets         568         694         817         910      1,005      1,062


The Qatar Financial Centre (QFC). The QFC provides financial institutions with a platform to support the development of Qatar and the wider region. It focusses on three core markets: asset management, reinsurance and captive insurance. The QFC is managed by the QFC Authority (QF CA). Institutions licensed by the QFCA are regulated by the QFC Regulatory Authority and an independent judiciary comprising a civil and commercial court and a regulatory tribunal.

The capital market. The Qatar Stock Exchange (QSE) is the principal market in Qatar for trade in equity, stocks and bonds. At the end of June 2015, a total of 43 companies were listed on the QSE. They had an aggregate market capitalisation of QR 648.7bn ($178.2bn), equivalent to about 93 per cent of Qatar’s forecast 2015 GDP.

In May 2014, foreign ownership limits were revised to allow GCC citizens to be treated as Qatari citizens in terms of ownership of companies listed on exchange. Non-Qataris who are not citizens of GCC countries were permitted to own up to 49 per cent of the shares of Qatari listed companies. On 29 May 2014, the MSCI Qatar Index was added to the MSCI Emerging Markets index. The QSE general index rose by 18 per cent in 2014. Market capitalisation rose by 22 per cent in the year. The market has failed to build on the momentum generated by the opening of the market in 2014 and both the general index and market capitalisation fell in the six months to June 2015 (see Chart 14).


Chart 14

Qatar Stock Exchange index and market capitalisation, 2010-15

2010 2011 2012 2013 2014 H12015
General index (left axis)   8,681.65       8,779.03   9,358.94           10,379.59   12,285.78           12,201.02
Market capitalisation (QR billlion) 450 457 460 556 677 649

Source: Qatar Stock Exchange



The IMF’s view of the main risks to the Qatar economy to 2015

The IMF’s Article IV report of April 2015 said there were three main risks to Qatar’s economy to 2020.

* Persistently low energy prices

Oil prices 10 per cent lower than the baseline IMF forecast will reduce government income and GDP growth. Qatar however has substantial reserves and the capacity to borrow. This is sufficient to maintain the present level of public spending, particularly on priority capital projects that will support the Qatar 2022 World Cup Finals.

Lower than forecast oil prices will damage private sector confidence and could undermine the quality of the banking sector’s assets. Nevertheless, private savings are abundant and the government stands ready to support the private sector should difficulties emerge.

A comprehensive review of Qatar’s long-term financial strategy will be required once priority projects are complete, mainly by the end of 2020, the IMF says.

* Increased energy price volatility due to uncertainty about the persistence of the oil supply shock and the underlying drivers of the price decline

Qatar has the capacity to deal with global oil and gas price volatility. The aim of reducing the share of hydrocarbons in exports to 25 per  cent by 2020 will help increase the government’s capacity to manage the impact on the economy.

* Side-effects from global financial conditions:

  • Sharp asset price adjustment. It is possible that Qatar could suffer serious real estate bubble challenges as demand for housing mounts ahead of the World Cup. There is as yet no policy for addressing such a challenge outside normal monetary policy and the established regulatory system for banking markets. The government nevertheless through its ownership of Qatar National Bank, the largest bank in Qatar by far, has the capacity to control credit expansion directly.
  • The normalisation of US monetary policy. This will tighten financial conditions in Qatar and, given the dollar peg to the Qatari riyal, any increase in US interest rates will lead to an appreciation of the riyal. This is expected to have a modest impact on growth and the current account given Qatar’s small non-hydrocarbon exports and the limited substitutability between domestic production and imports.