Discusses key economic indicators and trade statistics, which countries are dominant in the market, the U.S. market share, the political situation if relevant, the top reasons why U.S. companies should consider exporting to this country, and other issues that affect trade, e.g., terrorism, currency devaluations, trade agreements.
Last Published: 11/3/2018
Qatar continues to be a resilient and diverse market despite regional unrest and some uncertainty in the global market, including the decline in oil prices from 2014 to 2016.  Yet, low oil prices, regional unrest, and political turmoil around Qatar have had an extensive effect on trade, with U.S. exports decreasing from $4.9 billion in 2016 to $3.1 billion in 2017. Despite this, the U.S.-Qatar political, commercial, economic, and security relationship remains strong.  U.S. companies still performed well in the market with awards in defense and other sectors, and even though the recent embargo on Qatar isolated the country from its Gulf neighbors, it has opened new opportunities for U.S. firms.
 
Oil prices have witnessed an increase since the onset of the embargo, reaching $70 a barrel in May 2018 for the first time since 2014.  The 2017 and 2018 Qatari budgets use a $45/barrel oil price figure; however, forecasts from Qatar National Bank expect that prices will average $69/barrel throughout 2018 and fall to $65/barrel in 2019 to counter an oversupply of oil.  
 
In 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 so-called Quartet countries and many regional airlines blocked by their governments from flying to and from Qatar (e.g., Emirates, Etihad, Saudia, Gulf Air).  The movement of goods across land and sea borders has also been impacted.  Qatar has moved quickly to establish other sources of imports and continues that effort, which may present 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. 
 
National oil company Qatar Petroleum (QP) nimbly rerouted its export routes following the onset of the embargo and did not miss a single outbound hydrocarbon shipment.  In July 2017, QP announced it would boost North Field production with an aim of increasing LNG exports by 30 percent by 2023, creating significant opportunities for U.S. energy companies in Qatar.  Since the onset of the embargo, QP has inked 15-year supply agreements with companies in Bangladesh and Vietnam and announced a flurry of overseas acquisitions in hydrocarbon blocks in Brazil, Oman, Mexico, South Africa, and Argentina.
 
The U.S. Embassy in Doha and the U.S. Commercial Service are closely monitoring the situation and continue to 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 related to this situation, please reach out to the U.S. Commercial Service at the U.S. Embassy in Doha.
 
In 2017, despite fluctuating oil prices, regional unrest, and a fiscal deficit, Qatar’s economy continued to grow but at a slower rate than the previous year, with a real GDP growth rate of 2.5%.  The economy is expected to see greater growth in 2018, with an accompanying fiscal deficit decrease.  This year, total government spending is projected to total $56 billion, up 2.4% from 2017.  The rise in spending accounts for major infrastructure developments, including those for the FIFA World Cup in 2022, as well as new school and hospital openings.
 
Inflation:  After reaching 2.7% in 2016, inflation rates averaged 0.4% in 2017.  Inflation began increasing again by the end of 2017, however, and is expected to average 2.2% over the medium term.  An inflationary uptick occurred in June, July, and August of 2017, immediately following the onset of the regional embargo on Qatar, driven by rising food prices resulting from a 40% drop in Qatar’s imports.  Food inflation was offset by an 11 percent year-on-year drop in the real estate price index. Inflation rates should become less volatile as Qatar continues to strengthen its new trade relationships.
 
In 2016, Qatar experienced its first fiscal deficit in 15 years, totaling USD 12 billion, due to declining oil prices. The deficit narrowed to USD 7.8 billion in 2017 due to rising oil and gas prices and an increase in domestic and external financing. The government of Qatar projects a deficit of USD 7.7 billion by the end of 2018.
 
The government has undertaken several key measures, such as pledging to boost natural gas production by 30 percent, raising $12 billion in an April 2018 bond issuance in the international debt market, and enforcing tighter monetary controls to moderate inflation.  Oil and gas continues to constitute the largest sector contributor to GDP at 48.5%, followed by construction at 17%, finance, insurance, and real estate at 14.7%, manufacturing at 8.4%, whole and retail trade at 7.4%, and transport and storage at 4.5%1.
 
The government has continued its focus on initiatives and efforts to diversify the economy and reduce spending on non-essential areas, 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 by 2020, completing several road and highways projects, and debuting the first phases of the Doha Metro and the Lusail Light Rail transit project in 2019. 
 
Qatar will host the 2022 FIFA World Cup, the world’s largest sporting event, for which it is constructing eight stadiums.  The Khalifa International Stadium was completed in May 2017; the remaining stadiums have all been awarded contracts with two stadiums scheduled to be completed by the end of 2018.  A draft law for Public-Private Partnership (PPP), which could help facilitate further foreign investment in Qatar by supporting the ownership and actual operation of the stadiums, has yet to be confirmed by the Government of Qatar, even though it was expected to pass in wake of the regional embargo.  The Ministry of Economy and Commerce has led efforts on the PPP law, along with a group of government agencies representing key sectors in the country. 
 
U.S.- Qatar trade was significantly affected by the embargo, with the total volume of trade decreasing from $6.1 billion in 2016 to $4.3 billion in 2017.  U.S. exports to Qatar decreased from nearly $5 billion in 2016 to $3.1 billion in 2017. However, Qatar is quickly recovering from the embargo.  The International Monetary Fund, reflecting on Qatar’s trade performance in 2017, concluded that Qatar successfully absorbed this external shock and that the nation’s economic outlook is broadly favorable.  U.S.-Qatar trade volumes have continued increasing in the first quarter of 2018.
 
In 2017, sovereign wealth fund Qatar Investment Authority (QIA) reiterated its commitment to continue investing USD 45 billion in U.S. equities and private transactions.  Over half of this amount was committed by the end of 2017.
 
The United States maintains a substantial trade surplus with Qatar, recorded at $1.9 billion in 2017, a decrease of $1.8 billion over 2016. U.S. exports to Qatar in 2017 decreased by 37 percent over the previous year to $3.1 billion.  Corresponding U.S. imports from Qatar, mostly oil and gas, stood at $1.2 billion, without significant change from the previous year.

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.



Qatar Trade Development and Promotion