Qatar - Market Overview Qatar - Market Overview
On June 5, 2017, the governments of Saudi Arabia, the United Arab Emirates, Bahrain, and Egypt severed diplomatic relations with the State of Qatar and imposed a series of economic restrictions, including shuttering the Saudi-Qatar land border, closing airspace to Qatari-registered aircraft, and limiting certain maritime traffic. Thus far, the impact on regional travel has been significant, with Qatar Airways forced to suspend all flights to the embargoing countries and many regional airlines blocked by their governments from flying to and from Qatar (e.g., Emirates, Etihad, Saudia, and Gulf Air). The movement of goods across land and sea borders continues to be impacted. In early February 2019, Emirati port authorities began allowing non-Qatari flagged or owned vessels destined for Qatar to transport goods through Emirati ports. U.S. companies, however, have largely continued to use diverted routes established after the onset of the embargo and are advised to confirm with Emirati authorities before onloading U.S. goods for shipment to Qatar directly from UAE ports. Post-embargo, Qatar moved quickly to establish other sources of imports and continues that effort today; in some cases, this has created new opportunities for American suppliers. Qatar has offset the loss of its former Gulf Cooperation Council (GCC) trading partners by increasing trade with regional partners, notably Turkey, Oman, Kuwait, and India.
Qatar’s national oil and gas company Qatar Petroleum (QP) nimbly rerouted its export routes following the onset of the embargo and to date has not missed a single outbound hydrocarbon shipment. In July 2017, QP announced it would boost North Field production with an aim of increasing Liquified Natural Gas (LNG)_exports by 43 percent by 2024, creating significant opportunities for U.S. energy companies. A number of tenders related to this expansion have already been announced and awarded. Since the onset of the embargo, QP has inked several long-term supply agreements with companies in Bangladesh, China, Vietnam, Thailand, and Pakistan and announced a flurry of overseas acquisitions in hydrocarbon blocks in Brazil, Oman, Mexico, South Africa, Argentina, Cyprus, Morocco, and Mozambique and invested over $10 billion in the Golden Pass Terminal in Sabine Pass, Texas.
Inflation rates averaged 0.22% in 2018. The Qatar Central Bank reported a year-on-year deflation rate of 0.3% in the fourth quarter of 2018, and a 1.3% deflation rate in the first quarter of 2019. The inflation rate average was higher in 2017, especially in the months following the onset of the regional embargo on Qatar, driven by rising food prices resulting from nearly a 40% drop in Qatar’s imports. Food inflation was later offset by an 11% year-on-year drop in the real estate price index.
The Government of Qatar has undertaken several key measures, such as pledging to boost natural gas production by 43%, enacting new foreign direct investment and foreign real estate ownership legislation, raising $12 billion in bond issuance in the international debt market in March 2019, and enforcing tighter monetary controls to moderate inflation. Oil and gas continue to constitute the largest sector contributor to GDP estimated at 36% in 2018, followed by construction at 15%, manufacturing at 9%, finance and insurance at 7.4%, whole and retail trade at 7%, public administration and defense at 7%, real estate at 6%, and transport and storage at 4%.
The government has continued its focus on initiatives and efforts to diversify the economy and reduce excessive spending, under the plan known as Qatar National Vision 2030. Qatar’s infrastructure and transportation sector has been a key focus of spending, with projects such as expanding Hamad International Airport, concluding the last phase of the new Hamad Port, completing several road and highways projects, and debuting the first phases of the Doha Metro and the Lusail Light Rail transit project.
Qatar will host the 2022 FIFA World Cup, the world’s largest sporting event, for which it is constructing eight soccer stadiums. Two stadiums have been completed to date. A draft law enabling Public-Private Partnerships (PPPs), which could help facilitate further foreign investment in Qatar by supporting the ownership and operation of the stadiums, is awaiting final approval by state officials. The Ministry of Commerce and Industry has led efforts on the PPP law, along with other agencies including the Ministry of Finance.
The country’s sovereign wealth fund, the Qatar Investment Authority (QIA), reiterated its commitment to continue investing $45 billion in the U.S. market, maintaining that approximately 60% of this amount has already been committed. In 2018, Qatar Petroleum announced a commitment of $20 billion for investment in the U.S. energy sector.
The U.S. Embassy in Doha and the U.S. Commercial Service continue to closely monitor the embargo imposed on Qatar and provide guidance and support to U.S. companies wishing to enter the market as well as those already doing business in the country. U.S. companies are encouraged to engage directly with their local Qatari partners, representatives, or agents to ensure business continuity and alternatives for sourcing and shipping of U.S. goods into Qatar. For the most up-to-date information, please reach out to the U.S. Commercial Service at the U.S. Embassy in Doha. Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.