Economic Growth Shifts in Qatar and the UAE
As Brazil is busy finishing the last construction for the 2014 World Cup, Qatar, the host of the 2022 World Cup, has started its infrastructure improvement plan to welcome its guests from all over the world. This preparation has really brought Qatar into the eyes of investors with high expectations for economic gains. Qatar is not alone, as we see millions of “host money” from foreign investors has pushed the UAE’s stock market also to a new high. This blog will give you the overviews of Qatar’s and the UAE’s economy in the recent years and will explain the reason why Qatar and the UAE have experienced growth in foreign investment.
Qatar is the world’s top liquefied natural gas exporter, but recent economic growth has been mainly bolstered by other sectors of its economy. Data released in April shows that Qatar’s major economic growth in 2013 was fostered by the construction and hospitality industries, pushing the economic growth rate to 6.5 percent. In contrast, the growth in gas sector slowed in recent years as gas facilities expansion ended. The economists estimated that the non-oil growth in Qatar will continue to growth this year, with an estimated $140-$200 billion worth of World Cup preparation projects that include new airports, roads, railways, and stadiums. While the improvement projects prepare Qatar for the upcoming World Cup in 2022, they also enhance the business environment. Investors are more willing to do business in Qatar because more resources and opportunities are available.
Similar to Qatar, the UAE’s non-oil industry is driving the economy and outperforming the oil industry, led by the manufacturing and hospitality sectors. Dubai catches the most of the focus since its tourism and manufacturing industry has the most rapid growth in the UAE. As the world’s luxury hub, Dubai's hotel occupancy rate increased 8 percent from last year. Moreover, UAE’s manufacturing industry benefits from its pivotal location as it neighbors Africa, India, the Indian subcontinent, and Central Asia. All of four of these have a deficit of manufacturing capacity and seek collaborations with the UAE.
Lastly, MSCI will soon upgrade Qatar and the UAE to “emerging market” status. This will bring more investments to these two countries and continue to increase its economic growth. A global asset manager said in the report that the UAE and Qatar, with their strong economic fundamentals, will stand out among the emerging markets in terms of economic growth and market performance. What do you think of the growth in Qatar and the UAE?