Qatar is a peninsula situated on the West Coast of the Arabian Gulf. It has a few islands, the important ones being Halool, Shira’aw and Al-Ashart. The total land area of Qatar is about 11,521 sq. kms and its population, as per 2008 census, is 824,789. The main challenge facing Qatar economy is to lower the country’s high rate of inflation while protecting the economy from the onslaught of the global financial crisis. The prime concern of Qatar is inflation, which in recent times had touched 15%. But, the drop in international prices of raw materials and food due to the financial recession has stopped the fear of inflation. Financial experts have estimated that Qatar is in a good position to withstand another year of global economic mayhem. This can be made possible by the rapid expansion of its liquid natural gas sector with sustained government investments. Economic gurus have predicted Qatar to be a top performer in the region this year. Qatar has one of the highest per capita incomes in the world.
Qatar is totally dependent on oil, but it has a potential resource for natural gas. It is estimated that one of the fields is the third largest reserve for liquefied natural gas in the world. Qatar’s oil reserves which are 3.3 million barrels are expected to last for 25 years. Oil production accounts for 80% of the total income of the country and Qatar economy is totally dependent on it.
There have been attempts towards industrialization and diversification, but it has met with only limited success. The industries include cement, fertilizer, steel, and petroleum. Steel production has had phenomenal success and has been making a profit since the past ten years. The government of Qatar has expanded oil and gas exploration projects and has offered attractive incentives to foreign investors. To boost foreign investment, the government has simplified and liberalized the investment portfolio to show progress in Qatar economy.
Agriculture is of the least importance as it contributes to only 2% of the GNP and the government is making efforts to improve this portfolio through irrigation schemes. The country produces only about 50% of the vegetables it consumes, while the rest is imported from neighboring countries. Qatar economy is also dependent on the live stock population, which includes 100,000 goats, about 1 million sheep, 30,000 camels, and 10,000 cattle. Their fishing industry draws in about 7,000 tons per year, most of which is shrimp.
Strange as it may sound, but Qatar is one of the world’s lowest tax economies. This is so because the government of Qatar would like to ensure that the percentage of GDP taken in taxation is as low as possible. There is no income tax or social security deduction on wages and salaries of employees. Tax is only imposed on commercial activities and with a very low rate.
Qatar has started a vigorous program of ‘Qatarization’ under which scheme all joint venture industries and government departments ensure that Qatari nationals are placed in positions of higher authority. The number of Qataris educated abroad, mainly in the United States has gone up and these Qataris are in a position to take over important posts which were formerly held by foreign nationals. Qatarization has ensured that all key positions are held by Qatar nationals only. Doha Securities Market (DSM) has shifted to a new phase keeping in view the present economic development. DSM has amalgamated financial, physical, and human resources and it is now better equipped to establish a solid foundation that is necessary for a growing Qatar economy.