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Economy in Brief

by Carol Stone Qatar's Economy: Oil Industry Fuels Other SectorsFebruary 2, 2007

As announced in Haver's client newsletter, published this past Wednesday, we have added available data to EMERGEMA for additional member countries of the Gulf Cooperation Council (GCC). This group of nations includes the United Arab Emirates, Bahrain, Saudi Arabia, Oman, Qatar and Kuwait, and they formed the GCC some 25 years ago to standardize policies and practices among themselves and to foster unity among their peoples.

Just this morning, we added nearly 100 new series for Qatar, including national accounts, prices and balance of payments. Most of these are annual and presently run through 2005. A selection of major items is shown in the table below.

In 2005, Qatar's real GDP totaled 90.7 billion riyals in 2001 prices, equal to just under US$25 billion, at a fixed exchange rate of 3.64 riyals/US$. About half of GDP is generated by the oil industry, but revenues from that sector and other sources seem to be feeding growth elsewhere, as other sectors of the Qatar economy are growing faster. In particular, finance and business services, the second largest industry, expanded significantly in 2004 and 2005. Notably, too, in 2005, the oil industry itself came virtually to a standstill in real terms.

As might be expected, the country has a sizable current account surplus. But the details show an unexpected pattern: through 2005 only the goods account ran a surplus. The country is a net importer of services and net income flows outward. While the former is not especially surprising, the latter is. A priori, we would think that investment income should flood in. Perhaps it does, but repatriated earnings likely flow out. Similarly, transfers, which are mainly workers' remittances, flow out in size as well.The central bank's balance sheet doesn't have an item specifically called "foreign exchange reserves". But it does show the holdings of deposits in foreign banks and of foreign securities. Not surprisingly, these have expanded. At US$5.3 billion [19.3 billion riyals at 3.64 riyals/US$], they are not large by global standards, but they grew by two-thirds from the end of 2004 through this past November.

Qatar (Bil.QRiyal) 2005 % Chg 2004 % Chg 2003 % Chg, Ann Rate 2000
Real GDP (2001 Prices) 90.7 6.1% 85.5 20.8% 70.8 4.6% 61.8
Oil Industry 48.0 0.6% 47.8 18.0% 40.5 3.5% 36.5
Finance, Business Services 8.8 17.1% 7.5 37.6% 5.4 4.2% 4.8
Other Industries 33.9 12.1% 30.3 21.7% 24.9 6.7% 20.5
Current Account 39.0   27.5   20.9   16.7
  Nov 2006 End 2005 End 2004   End 2003   End 2000
Central Bank Foreign Deposits & Security Holdings (Bil.US$)*
$5.3 $4.5 $3.2   $2.7   $1.1
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