Qatar Business Forecast Report Q2 2008

Publication Date	April 2008
Publisher	Business Monitor
Product Type	Report
Pages	44
ISBN Number	1748-2380
Product Code	BMI01237

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Summary

Let The Good Times Roll... Over the next five years, the good times look set to continue in Qatar. Real GDP growth rates will stay above 4.5%, external debt will continue to decline and the highly attractive business environment will remain one of the most popular destinations for foreign investment in the Middle East.

This will also seep into the political arena where Emir Sheikh Hamad Bin Khalifa al-Thani looks set to continue to cultivate a web of relations across the region, in order to ensure the small emirate's protection from larger nations. However, key risks do remain. There is still work to be done to open up the business environment to foreign investment and, as with other countries in the Gulf, rising inflation is starting to take its toll on the economy.

The recent thaw in relations with Saudi Arabia - following a number of visits by diplomats between the two countries - highlights Qatar's willingness to put regional interests above its own political grievances. We therefore expect Emir Hamad to continue with his diplomatic initiatives across the Middle East, in an attempt to ensure protection from Qatar's bigger and more powerful neighbours.

However, in the ongoing nuclear dispute between Iran and the US, we expect Qatar to continue to shun relations with its regional neighbour and primarily remain a US-ally.

While real GDP growth will slow slightly over the forecast period - down to 4.8% by 2012 - Qatar's economy will continue to grow at robust rates on the back of strong growth in the oil and gas sector, and an number of new developments in the LNG industry. Qatar's sound macroeconomic story will also filter through into government debt, which is set to fall as a percentage of GDP, on the back of rising nominal GDP growth and the government's continued efforts to reduce its external debt burden while oil prices are at record highs. Although inflation is a key risk - we forecast consumer price inflation to come in around 10.0% year-on-year (y-o-y) in 2008 - the government is starting to implement reforms, such as introducing rent caps and issuing bonds, in an order to curb rising prices.

Qatar's business environment remains a very attractive investment destination for foreign investors as the country has very few security risks and offers a wealth of opportunities in both the oil and non-oil sectors. Indeed, the government has worked hard over recent years to improve the business environment by dismantling barriers to investment and increasing access to previously prohibited sectors of the economy. That said, key barriers to investment, such as widespread corruption and restrictions on foreigners owning property remain key stumbling blocks for investment going forward.

Content

Executive Summary
- Let the Good times roll
Chapter 1: Political Outlook
- SWOT Analysis
- BMI Political Risk Ratings
- Foreign Policy
- Favouring Quantity Over Quality
- We expect Qatar to continue to put regional ties within the GCC above its own interest, as highlighted by the
- recent thaw in relations with the Saudi Arabia, although Doha will still build numerous relationships across the
- globe in order to protect its interests.
Chapter 2: Economic Outlook
- SWOT Analysis
- BMI Economic Risk Ratings
- Economic Activity
- Hydrocarbons to Fuel Stellar Growth
- Although real GDP growth will slow slightly over the forecast period, we expect the rate to stay above 4.5%, on the
- back of strong hydrocarbons growth and continued expansion in the non-oil sector.
- Monetary Policy
- Inflation To Ease In Spite Of Reluctance To Depeg
- While inflation will remain a key problem for the government in the short term - we recently revised our 2008 CPI
- forecast to 10% y-o-y - an eventual fall in the price of oil and increased action from the central bank should help
- to ease price pressures towards the end of the forecast period.
- External Debt
- Debt Burden To Continue To Decline
- Although total government debt will rise in nominal terms over the forecast period, it will decline as a percentage
- of GDP, due to strong nominal GDP growth and the government's continued efforts to pay off its external debt
- burden while oil prices are high.
Chapter 3: Special report
- Looking Beyond 2008
- US: the rebalancing act
- Unwinding the Imbalances
- We believe that a substantial, multi-year shift in the US external accounts is under way. A weak US dollar and
- subdued domestic consumption should lead to a narrowing in the US's structural current account deficit.
- China: What If We're All Wrong?
- Our Core Scenario For China
- We are retaining our positive headline growth projections for China across the forecast period to 2012, with our
- expectations of the continued success of the urbanisation process and export-driven growth model underpinning
- our assumptions.
- Japan: Immigration Key to Long-term Growth
- Demographic Woes Portend Long-Term Decline
- Immigration remains the only realistic way that Japan can overcome its long-term economic challenges.
Chapter 4: Business Environment
- SWOT Analysis
- BMI Business Environment risk ratings
- Business Environment Outlook - Q2 2008
- Institutions
- Infrastructure
- Market Orientation
- Operational Risk
Chapter 5: Key Sector
- Oil & Gas
Executive Summary
- BMI expects that maritime cargo volume, measured in million tonnes, will grow on average by 7.8%
- per annum over the next five years.
List of Tables
- Table: Selected Cabinet List
- Table: Economic Activity
- Table: Monetary Policy
- Table: Government Debt
- Table: BMI Business and Operational risk ratings
- Table: BMI Legal Framework ratings
- Table: Demographic Indicators
- Table: Qatar Annual FDI Inflows
- Table: BMI trade ratings
- Table: Top Export Destinations
- Table: Freight Carried, Domestic And International