Discusses key economic indicators and trade statistics, which countries are dominant in the market, and other issues that affect trade.
The United States and Qatar enjoy a strong commercial, political, and security relationship. With just 300,000 citizens, Qatar enjoys among the highest gross domestic product (GDP) per capita in the world and looks to overseas partners to achieve strategic goals, creating opportunities for U.S. businesses.
According to the World Bank, by the end of 2020, Qatar’s GDP annual growth contracted 2.5%, largely due to the Covid-19 pandemic and low hydrocarbon prices. The International Monetary Fund (IMF) forecasted in April 2021 that Qatar’s annual GDP would rebound to 2.4% growth by year-end, with output likely back to pre-pandemic levels by early 2022. The IMF further forecasts that the post-pandemic recovery and the 2022 FIFA World Cup will drive growth to 3.6% in 2022, with expansion continuing at a steady pace for the next five years due to the North Field LNG Expansion, expected to be operational in 2026-2027. The IMF forecasts strong fiscal surpluses in the coming years, even before the North Field expansion project comes fully online, averaging 5.9% of GDP.
Both total U.S. exports to Qatar and the U.S. trade surplus with Qatar have declined steeply in the last two years, with U.S. exports to Qatar going from an all-time high of $6.45 billion in 2019, to $3.41 billion in 2020, to just $1.56 billion in the first nine months of 2021. According to the U.S. Census Bureau, year-to-date bilateral trade as of September 2021 showed a $199.7 million U.S. trade surplus with Qatar, with aircraft parts, cars, petroleum coke, and valves as the top U.S. exports to Qatar. Even with the sharp decrease in U.S. exports to Qatar during the Covid-19 pandemic, which has yet to rebound, U.S. companies continue to play an important role in the market, particularly in the energy, defense, technology, and engineering sectors, among others.
Despite macroeconomic contractions and low petrochemical prices at the onset of the Covid-19 pandemic, Qatar remains among the most fiscally stable markets in the Gulf. Qatar was proactive in slowing the spread of Covid-19 and limiting its health impacts through containment measures and rapid vaccination rollout. A crucial part of the Qatari spending policy was postponing unawarded contracts for non-essential, non-World Cup-related investment, construction, and development projects, to reduce deficit spending. However, there is cause for optimism in the year ahead, as oil prices surpassed $75 per barrel in June 2021 for the first time since 2018.
Qatar remains an important investment partner for the United States. Its sovereign wealth fund, the Qatar Investment Authority (QIA), is heavily invested in the United States and focused on new investment opportunities. Since 2015, Qatar has invested heavily in U.S. real estate and asset-heavy retail. QIA is seeking to diversify its U.S. investments by expanding to the technology and healthcare sectors and has committed to investing more than $45 billion in American infrastructure.
Qatar has taken steps recently to further attract foreign direct investment (FDI) and innovation by passing a foreign investment law that allows foreign firms to have up to 100% ownership in most economic sectors and a Public-Private Partnership (PPP) Law to promote economic diversification and create greater opportunities for U.S. companies in the education, environmental technologies, and healthcare sectors. U.S. companies have been active in Qatar, providing technical expertise, equipment, and construction services to Qatar’s major projects, such as the North Field liquefied natural gas (LNG) expansion, the buildout for Qatar’s role as host of the 2022 FIFA World Cup, and the implementation of Qatar’s National Vision 2030.
Noteworthy advances in Qatar’s relationship with its neighbors have occurred in the last year after the Al-Ula, Saudi Arabia conference and end of the Gulf Rift in January 2021. Qatar has been reestablishing relations bilaterally with each country involved in the Rift, which began in June 2017 when the United Arab Emirates, Saudi Arabia, Bahrain, and Egypt severed diplomatic and commercial ties with Qatar. Although Qatar’s economy made major strides in resilience during the years of regional tensions, the restoration of direct travel and trade ties with all neighbors has a wide range of economic and logistical advantages for the business community.
Historic advances also took place domestically in Qatar in the past year. In October 2021, Qatar held its first-ever elections for the Shura Council, with 64% voter turnout. The Shura Council is a 45-member consultative body created in 1972. Although limited in authority, the Council represents a new and significant phase in Qatar’s political development. In the future, this body will discuss and approve general state policies and budgets, and draft law proposals, with increased influence and potential impact on business interests in Qatar.
In addition, Qatar announced a National Climate Change strategy in October 2021, shortly after state-owned Qatar Petroleum (QP) rebranded as Qatar Energy (QE). The name change to QE directly supports Qatar’s focus on Liquefied Natural Gas (LNG) as a cleaner energy alternative that can serve as a transition energy source while the world adopts more renewable energy sources. QE is deepening its investments in LNG with its $30 billion North Field LNG expansion project. This project includes the initial development of six LNG mega trains, creating significant opportunities for U.S. energy companies. In addition, QE invested $18 billion in the U.S. energy sector in the Golden Pass Terminal ($10 billion) in Texas and a petrochemical plant on the Texas Gulf Coast ($8 billion). QE oversees the oil, gas, fertilizer, petrochemicals, and refining operations in the country and has multi-billion interests abroad. As a global leader in LNG extraction, QE is an important player both in Qatar and globally.
Lastly, in October 2021, the Amir of Qatar announced a Cabinet reshuffle and Ministry realignment that had been in development since 2019. Some Ministries were reorganized and demerged, while other Ministries and their respective Ministers remain unchanged. Of importance to the U.S. business community, the Amiri decree reassigned Minister of Commerce and Industry Ali bin Ahmed Al-Kuwari as Qatar’s new Minister of Finance, just months after he stepped in as acting minister; Sheikh Mohammed bin Hamad bin Qassim Al-Abdullah Al Thani was named the new Minister of Commerce and Industry. The announcement also split the Ministry of Transport and Communications into two entities: the Ministry of Communications and Information Technology (led by the newly appointed Minister Mohammed bin Ali bin Mohammed Al-Mannai) and the Ministry of Transport (retained by former Minister of Transport and Communications Jassim bin Saif Al-Sulaiti).
The U.S. Commercial Service in Doha continues to monitor government changes to counseling U.S. businesses with the most current regulatory information available.