One of the world’s wealthiest countries
Qatar is a country located in West Asia, on the Qatar Peninsula situated on the east coast of the Arabian Peninsula, with a population of 2.7 million. In 2021, the gross domestic product was worth $179.7 billion ($66,838 per capita). In the GDP structure, industry accounts for 60%, services for 44.8%, and agriculture for 0.3%. As for the business environment, 96% (25,000) of companies are small or medium-sized enterprises (SMEs). Qatar’s capital, Doha, is one of the largest financial hubs in the region.
Qatar’s political system is a monarchy. Tamim bin Hamad Al Thani has been the emir since 2013, concentrating most of the executive and legislative powers in his hand. The emir’s responsibilities include the appointment of the prime minister and cabinet. The Consultative Assembly, which consists of elected members and those appointed by the emir, has limited powers regarding blocking legislation and dismissing ministers. The activities of political parties are banned, and candidates in elections run as independents.
The economy is based on the extraction and trade of oil and hydrocarbons. Qatar has 1.5% of the world’s oil reserves (25.2 billion barrels), and daily production fluctuates around 1.9 million barrels. Qatar also has the world’s third-largest natural gas reserves (843 trillion cubic feet) after Russia and Iran, accounting for 11% of the world’s resources. Qatar is one of the world’s leading natural gas and LNG exporters. Authorities are advancing other projects in this market sector.
Population of Qatar
Qatar’s population is 2.7 million. Like other countries in the region, Qatar relies on an influx of foreign labor. According to various estimates, Qataris are 10-12% of the population (about 330,000), and the remaining 88-90% are expats. The largest foreign communities are Indians (700,000), Bangladeshis (400,000), Nepalis (400,000), Egyptians (300,000), and Filipinos (236,000). On the other hand, among Western citizens, the sizable groups are Americans (40,000), British (22,0000), and Canadians (9,200).
Arabic is the official language in the country, but proficiency in English is widespread. In terms of religion, 67.7% of the population is Muslim. The other largest groups are Hindus (13.8%), Christians (13.8%), and Buddhists (3.1%). Most Qataris follow Wahhabi Islam, one of the most orthodox Islamic branches. According to the constitution, the primary source of Qatari legislation is Sharia. The legal system in practice is a mixture of Sharia and civil law.
Qatar is a highly urbanized country. The urbanization process began due to oil revenues, which started to be extracted in 1940, and the expansion of urban infrastructure significantly accelerated in the 1980s. Today 99% of the population lives in cities. The largest of these is the capital, Doha, now home to 1.2 million people.
Economy of Qatar
Like other Persian Gulf countries, Qatar’s main source of revenue is the export of oil and natural and liquefied natural gas. Qatar was a member state of the Organization of the Petroleum Exporting Countries (OPEC) from 1961 to 2019. Qatar is the world’s third-largest exporter of natural gas and the second-largest exporter of LNG. Most exports go to markets in Asia and Europe, and natural gas is also shipped by pipeline to the United Arab Emirates and Oman.
Qatar’s currency is the Qatari riyal (QAR), whose exchange rate, by a 2001 decree, is pegged to the dollar. Due to environmental conditions, Qatar is dependent on food imports. The industries that employ the highest number of Qatari residents are oil and gas production and construction. The impetus for many construction projects also came from the 2022 FIFA World Cup, for which sports, tourism, and transportation infrastructure, among other things, has been expanded.
Infrastructure projects are also part of the Qatar National Vision 2030 plan, which has been implemented since 2008 under the supervision of the General Secretariat for Development Planning. Its pillars are economic, social, human, and environmental development. Through its implementation, the Qatari authorities intend to diversify the economy, improve the quality of education, and strengthen environmental protection. The creation of a knowledge-based economy will be accompanied by the continuation of projects in the so-called industrial cities (Dukhan, Ras Laffan, Mesaieed, Doha) and the process of “Qatarization” of the economy.
International trade
Qatar is the world’s 57th largest economy by GDP, the 40th largest exporter, and the 63rd largest importer. Qatar’s exports are worth $87.2 billion, and its imports are $27.9 billion. Qatar’s main trading partners are China, Japan, India, South Korea, Singapore, the United Arab Emirates, the United Kingdom, Thailand, Pakistan, and Italy.
Among the most imported goods are industrial machinery (17.6%), electrical machinery (9.52%), motor vehicles and parts (6.82%), precious stones and metals (4.81%), iron and steel articles (4.11%), pharmaceuticals (3.07%), furniture (3.02%), aircraft (2.82%), plastics (2.49%), and precision instruments (2.27%). Next in line are iron and steel, chemicals, meat, clothing, cosmetics, fruits, and vegetables.
The largest group of exported goods are oil and mineral fuels (84.4%), plastics (3.6%), fertilizers (2.76%), aluminum (1.92%), organic chemicals (1.45%), ships and boats (1.23%), inorganic chemicals (1.05%), natural minerals and stones (0.646%), motor vehicles and parts (0.503%), and aircraft (0.398%). In addition, industrial machinery, chemicals, iron and steel materials, precious stones and metals, watches, paper, and rubber are also exported.
Trade agreements
Qatar has signed trade agreements with Gulf Cooperation Council (GCC) countries. Qatar has close economic ties (common market and customs union) with Saudi Arabia, Bahrain, Kuwait, Oman, and the United Arab Emirates.
Under the Greater Arab Free Trade Area Agreement (GAFTA), Qatar has free access to the markets of Algeria, Saudi Arabia, Bahrain, Egypt, Iraq, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Palestine, Syria, Tunisia, and the UAE.
Agreements with associations of countries:
Gulf Cooperation Council (GCC)
European Free Trade Association (EFTA)
Agreements concluded by the GCC:
Singapore
Qatar has also signed more than 60 double tax and investment protection agreements.
Qatar-European Union relations
Relations between Qatar and the European Union were initially based on the 1988 EU-Gulf Cooperation Council Cooperation Agreement. The signing of the Cooperation Arrangement in March 2018 gave new impetus to the mutual relationship. It introduced political dialogue and enhanced cooperation in vital areas such as the private sector, research, and innovation.
The European Union is Qatar’s fourth trading partner (11.5% share of its trade), and total bilateral foreign direct investment amounted to 38 billion euros. EU exports in 2022 were worth nearly €10 billion. The EU mainly exports industrial machinery, electrical equipment, boats, motor vehicles, aircraft, medicines, and food to Qatar.
In 2022, relations were strained by an investigation into alleged Qatari corruption in the European Parliament. However, the European Union supports Qatar’s economic diversification efforts as part of “Qatar National Vision 2030.” An EU diplomatic delegation to Qatar also opened in September 2022.
Opportunities and challenges
A tariff of 5% is imposed on products imported into Qatar, which is regulated by the Gulf Cooperation Council. There is also a protectionist tariff of 12-20% in some cases. Starting export operations requires a significant amount of money. There are also risks associated with the high level of competition, as Qatar is home to many international companies. Further impediments include the requirement for a physical presence in Qatar, the obligation to enter into exclusive contracts with sales agents, and the limited transparency of the public procurement system.
Another challenge is the local culture, where religion is associated with a different workflow. The week in Muslim countries begins on Sunday and ends on Thursday, which can hinder communication and business operations. The holy days and the Ramadan period require special attention from entrepreneurs interested in expanding into Qatar. An expert advisory is recommended for proper planning and to enter the Qatari market.
Opportunities for foreign entrepreneurs involve the Qatari economy’s dependence on food imports and imports of exclusive clothing, jewelry and cars. Infrastructure projects related to the implementation of “Qatar National Vision 2030” are another area of expansion. There is also great potential in the growing tourism and the high-tech industry. The energy transformation process, focusing on renewable energy resources, primarily solar energy, also presents promising opportunities.