Qatar GDP and Wages for 2023

Economic Change in Qatar 1995–2020

From the outset, it is important to note that Qatar was one of the poorest countries in the world prior to World War II. At the time, the country’s derived a large portion of its revenue from fishing and pearling (Etheredge 2011:99). This began to change in the 1940s, following the discovery and development of oil reserves. Over the last four decades, Qatar’s economic growth has been rapid.

Qatar has become a wealthy country, with a free, well-monetised economy without deposit interest-rate ceilings and market forces deciding interest rates. It does not have a problem of population, poverty traps, or of the economy in the way that some other developing countries do. Since the mid-1990s, policymakers’ongoing attempts to diversify income, to control government spending, and to oversee privatisation have contributed to improved efficiency and accelerated economic growth in the long-term. Several changes in recent years have resulted in a more successful fiscal policy, creating a more favourable market and economic climate and strengthening the position of the private sector. Economic reforms remain a principal priority for decision-makers amid rising oil prices and revenues. Meanwhile, additional steps have been taken to develop a broad legal and economic framework which appeals to foreign investment, in line with a free market and an external Qatar economy. In the 1990s, the Qatari Government began to change legislative structures to ensure a sufficient and free inflow of foreign capital. Law No. 25 in 1990 approved the engagement of non-Qatari capital in a broad range of exclusively Qatari economic activities. In 2000, the government of Qatar amended the legislation regulating the legal and economic environment and allowed foreign investors to own 100% of all ventures. Exceptionsto this are banking, insurance and general trade, where a partnership of 51% is still necessary in Qatar. The government has also adopted regulations on intellectual property and lowered tariffs to comply with the requirements of the World Trade Organisation (WTO) (El-Mefleh and Shotar 2008).

In selecting the indicators, two key attributes have been taken into consideration, namely their procyclical and countercyclical nature. This involves the movement of the indicator in comparison to the economy. For instance, while the unemployment rate is considered countercyclical because its direction of movement is opposite to that of the economy, gross domestic product (GDP) is deemed procyclical because its direction of movement is the same as that of the economy. The former decreases with good economic performance while the latter increases when the economy thrives. As such, two of the macroeconomic indicators that I will be highlighting in this thesis include GDP and the unemployment rate. Further, it is also important to note that, according to the U.S. Energy Information Administration – EIA (2015), “Qatar is the largest exporter of liquefied natural gas (LNG) in the world, and the country’s exports of LNG, crude oil, and petroleum products provide a significant portion of government revenues”.In this light, this analysis will also highlight the country’s crude oil exports and natural gas exports over this 25-year period.

1.1.1. Annual GDP

GDP is one of the most important indicators that we can be used to make sense of Qatar’s economic growth over the last 25 years. This is, in essence, a lagging indicator. As can be seen from the graphs below, the country’s GDP has generally been on an upward trend since the year 1995, albeit with the country’s GDP experiencing a significant slump in the years 2014, 2015, and 2016. Between the year 1995 and 2000, the country experienced significant growth in GDP – from $8,138 million in the year 1995 to $17,760 million in the year 2000. This can be attributed primarily to the significant rise in the global demand for oil in this period (Yancken and Wilkinson 2001:44).

Qatar set a minimum wage in 2017 at QR1,000 per month, with QR500 per month for accommodation and QR300 for food given by an employer (Sergon, 2022). The average monthly salary for workers is QR15,700 (). For others, it is:

· Civil Engineer: QR14,000

· Customer Service Representative: QR5,810

· Waitstaff: QR4,980

· Hotel Manager: QR28,100

· Accountant: QR10,400

· Teacher: QR11,500

· Translator: QR13,300

· CEO: QR35,300

There is also a significant income gap between high-income expats from Europe and low-income expats from Pakistan, who make as little as QR1,000 (Sergon, 2022).

As figure 1.1. shows, the growth in GDP was sustained in the years 2000 to 2010. However, the trajectory of GDP growth was interrupted in the following decade (2010-2020), as indicated in figure 1.2. The slump in the years 2014, 2015, and 2016 can be attributed to a drop in oil prices in the period 2014 to 2016 (Stocker, Baffes and Vorisek 2018). Significantly, a blockade was also imposed on the country in the year 2017 (Hussein, 2017). However, it is clear from figure 1.2 that the country was able to weather the effects of the blockade following marginal growth in GDP in both 2017 and 2018. In the final analysis, it is important to bear in mind that the GDP of Qatar relies heavily on the country’s hydrocarbon sector.

Source:

https://countryeconomy.com/gdp/qatar

Source:

https://countryeconomy.com/gdp/qatar

Source:

https://countryeconomy.com/gdp/qatar

This is more so, given that, according to an IMF (2019) report, a significant portion of its GDP can be attributed to this sector. The economy has experienced a significant sectoral change over the last few decades, primarily as a result of the Qatari government’s major initiative to grow and diversify its economy.

1.1.2. Unemployment Rate

In addition to GDP, the unemployment rate is another key lagging indicator that we can make use of in our assessment of economic growth in Qatar. As Arnold (2007) points out, the unemployment rate is essentially an estimate of the proportion of the working population who are not employed in a specific period. In the present context, this indicator relates primarilyto Qataris who are actively looking for work but who remain unemployed. Data from the World Bank indicates that Qatar’s employment rate has fallen significantly since the year 1995– from 2.68% in the year 1995 to 0.09% in the year 2019 (World Bank, 2020).

As per the data presented in figures 1.4, 1.5 and 1.6, Qatar has one of the lowest unemployment rates in the world. In fact, as can be seen in Table 1.6, the country’s unemployment rate of 0.09% was the lowest in the world in 2019. Only Cambodia, Niger, and Belarus came close, at 0.3%, 0.4%, and 0.5% respectively (Walters, 2020). The listed figures are relatively low in comparison to those of some of the world’s largest economies. For instance, the United States, United Kingdom, and China have employment rates of 4.1%, 3.9%, and 4.8% respectively (Walters, 2020). There are various reasons why the unemployment rate of Qatar has fallen and remained low over time. Two of the key factors on this front are plenty of job opportunities and a highly effective safety net. According to an analytical piece by KPMG, Qatar has abundant natural resources and has continued to put measures in place to attract foreign investment (KPMG, 2014). Well-formulated investment incentives and a favorable tax regime has made the country a global investment hub.

Source:

https://www.macrotrends.net/countries/QAT/qatar/unemployment-rate

Source :

https://www.macrotrends.net/countries/QAT/qatar/unemployment-rate

Source:

https://www.macrotrends.net/countries/QAT/qatar/unemployment-rate

As KPMG has pointed out, the country has, in recent times, been streamlining “its regulations to attract foreign capital and is making a concerted effort to diversify into non-hydrocarbon sectors” (KPMG, 2014). Qatar has an extremely large expatriate population, which continues to supply its labour market with both skilled and unskilled labor. However, the country’s labourAct prioritises Qatari nationals when it comes to filling the available employment opportunities. As per Okun’s law, the sustained decrease in the unemployment rate could be linked to growth. According to this law, “output depends on the amount of labor used in the production process, so there is a positive relationship between output and employment” (Wang 2019:460). This appears to be what has happened in the case of Qatar.

1.1.3. Natural Gas and Crude Oil Exports

According to EIA (2015), Qatar is the largest exporter of liquefied natural gas (LNG) in the world, and the country’s exports of LNG, crude oil, and petroleum products provide a significant portion of government revenues. To a large extent, it is the hydrocarbon sector that has made this peninsular Arab country one of the world’s wealthiest nations. Relative to the size of its population, the country’s hydrocarbon reserves can only be described as immense. Indeed, according to the Oxford Business Group (2007), the country’s economic transformation beganafter the discovery of its hydrocarbon reserves, including, in 1971, the discovery by Shell of the North Field, the world’s largest single gas deposit.

As shown by figures 1.7, 1.8, and 1.9 below, the country’s natural gas exports have increased exponentially from the year 1997 to the year 2019, from only 2860 to 143000 million cubic metres. This has corresponded with the country’s GDP growth over the same period. Thus, natural gas must be considered one of the cornerstones of the country’s economy. As far as oil exports are concerned, it should be noted that Qatar only exports a fraction of its total oil production. Although the country gradually increased its crude oil exports between 1995 and 2000, the data in figures 1.10 and 1.11 indicates that there were fluctuations in those exports over the last two decades. This can be attributed to the move by the country to achieve a balance between its exports and its domestic consumption and the production limits and moratoriums imposed by OPEC during the period under consideration.

Source:

https://www.ceicdata.com/en/indicator/qatar/crude-oil-exports

Source:

https://www.ceicdata.com/en/indicator/qatar/crude-oil-exports

Source:

https://www.ceicdata.com/en/indicator/qatar/crude-oil-exports

In the final analysis, it is important to remember that the nation’s economy is largely dependent on gas and oil-related industries (Cameron and Stanley 2017:172). These industries have been further propped up by the country’s heavy investment in this area from as early as the 1990s. It is for this reason that the country has become one of the largest gas exporters in the world and the largest exporter of LNG. Looking ahead, however, the country needs to take steps to diversify from gas and oil. This could be accomplished by making investments to prompt growth in other, non-hydrocarbon sectors. These include, but are not limited to, financial services, tourism, healthcare, and hospitality. This view is supported by analysis by the Oxford Business Group, which indicates that the country has made use of its gas as well and oil revenues to lay strong foundations for expansion in other sectors. According to the Oxford Business Group (2012), this is even more so the case given the need to ensure that the gains made in the past are sustained in the long term.