Qatar diversifies its economy away from risks of dependence on one sector

Qatar is making unremitting efforts to diversify its economy away from the risks posed by dependence solely on the hydrocarbon sector and active non-oil sectors for achieving sustainable growth.

The economic outlook bulletin for the state of Qatar 2013-2014, issued by the Ministry of Development Planning and Statistics, showed that the rate of growth in the non-hydrocarbon economy will reach 10.3 per cent this year, up from 9.8 per cent in 2013.

It is certain that the primary engines for this growth are the heavy activity of the industry, construction and services as well as population growth, in addition to the huge fiscal spending of around USD 210 billion, projected for 2014-2021, according to the International Monetary Fund.

With this growth in key components of the non-hydrocarbon sector, its share in the GDP is expected to grow from 49.9 per cent this year to 57.2 per cent in 2016, enabling the State of Qatar to enter a new phase of economic diversification toward the goal of financing most of its general budget without relying on oil and gas revenues by the year 2020, and funding them entirely by non-hydrocarbon sources by the year 2030.

This fact takes a more realistic dimension by returning to figures recorded for the few past years, which showed that the share of non-hydrocarbon sector in real GDP of the state rose from 40.4 per cent in 2005 to 43.2 percent in 2012, according to the Ministry of Development Planning and Statistics, and then to 45.6 per cent in 2013 with expectations to reach 50.8 per cent by the end of this year.

The primary focus in this transformation is 'Qatar's National Vision 2030', whose economic axioms have been identified by three interrelated goals through which it seeks to sustain a high standard of living, expand the creative capabilities and entrepreneurship and to promote economic and financial stability.

The bulletin also showed that the most important mechanisms that have enabled the State of Qatar to activate the diversification policy is expanding the contribution of the private sector in the development process, good recruitment for oil and gas resources, spending on the development of promising economic sectors, provision of a favorable climate to attract investment, creation of free economic zones, formation of strategic partnerships with international companies, updating laws and regulations and work on the formation of an effective national cadres.

Moreover, other mechanisms have effectively contributed to diversify the sources of income including the sovereign fund of the State of Qatar, growing development of petrochemical projects, public and private shareholding companies, and above all, the general stable climate, thanks to the political factors, both internal and external, the economic boom experienced by the state that led to a high rate of growth.

This policy has generated positive feedbacks and imposed a new reality to reach a competitive diversified economy, as the state has invested and encouraged to increase investments in the private and foreign sectors that are not related to energy, such as financial services, health, education, sports and tourism-related activities.

And among some of the most important developments witnessed in recent years was the increase of funding and transfer of Qatar Development Bank to help develop the private sector, where the state, the sole shareholder in Qatar Development Bank in 2008, increased its capital from 200 million rials to 10 billion rials in order to promote the growth of the private sector in State in line with the 'Qatar National Vision 2030.' The Qatar Development Bank offers a wide range of services and products that vary between different financing options and advisory support and mentoring for small and medium-sized enterprises in relation to the establishment and growth and expansion of their activities, as well as export of services in order to promote exports from Qatar to international markets.

In this context (the context of supporting the private sector), the State launched Qatar SMEs apparatus, to increase the proportion of small and medium enterprises, which account for about 15 per cent of the country's economy, through the provision of grants on the basis of performance, and opportunities for companies nascent.