Qatar’s strong and diverse private sector makes it stand out amongst its regional peers thanks to the government’s wise policies and clear vision. The Ministry of Development Planning and Statistics expects that despite lower oil prices, real GDP growth will remain healthy at 3.8% in 2017, with the non-hydrocarbon sector continuing to account for most of the economy’s expansion. Contributions to Qatar’s growing private sector have come from many different sources, including the banking sector. However, it is the construction industry which has been the primary growth driver of the economy. Supported by government spending, construction has been stimulated by large infrastructure projects and major real estate developments that are playing a significant and fundamental role in economic growth and development.
While most of the attention has been rightly on the construction sector, looking ahead it is expected that services will be the largest contributor to growth in 2017 to 2018, as construction projects complete and services continue to record solid growth. A combination of a growing population with the highest GDP per capita in the world, high levels of disposable income, and an increasing number of tourists mean that prospects for the service sector are looking healthy. For example, the food and drink sector has been forecast to grow by annual growth rate of around 14%, especially at the premium end of the market. Qatar is leading the Middle East in developing the most advanced fully multimodal transport network, and major development projects on the roads, rail, Hamad International Airport and Hamad Port has been a catalyst to the country’s logistics sector. Logistics is driving growth in the transport sector in general and has great potential when you consider that most of Qatar’s transport-related infrastructure investments are not yet operating at 100% capacity.
As a world-class business, sports and tourism hub, Qatar’s trade and hospitality industries are also growing robustly due to conference activities, the hosting of major sports tournaments, and the growth in tourist arrivals. The Qatar Tourism Authority has been successful in attracting a large number of tourists to Qatar, with over 2mn visitors reported in the first 9 months of last year, of whom more than a million visitors from the GCC. $40bn worth of investment in tourism infrastructure in the run up to the World Cup in 2022 and onwards to 2030 means that Qatar’s hospitality and hotel industry is poised to experience healthy growth. Retail trade too is expected to surge as household spending is forecast to increase by over 15% a year in the next few years, and the list of Qatar’s shopping malls, either recently completed or in the pipeline, continues to lengthen.
Top-down government spending on large infrastructure, real estate and transport projects has been a boon to construction industry but as these projects mature, services are becoming an increasingly large component of Qatar’s private sector, especially when population growth and rising consumer spending are added to the mix. The strength and variety of Qatar’s services sector shows that Qatar’s economy is maturing, and the government policy of economic diversification is working. Construction is providing the economic stimulus for a larger, more diverse and competitive economy in the medium-term and Qatar is on target to achieving the strategic goal laid out in the Qatar National Vision 2030 of a knowledge-based economy.
Dr Abdulaziz A al-Ghorairi is senior
vice-president & group chief economist and head of asset management at
Commercial Bank.
Dr Abdulaziz A al-Ghorairi
