Impact of oil prices on Qatar economy
22 Sep 2015For a nation that thrives on oil economy, Qatar seems to be the least affected by the fluctuating oil prices in 2015. Many expected a huge impact on Qatar but so far the impact has been moderate. A new study revealed that this small Middle Eastern Nation in the past few years has diverted its attention to construction and infrastructure development and this has helped Qatar stem the impact of oil price fluctuations in the global market. Qatar today has shown the fastest growth in the GCC nations in terms of the construction market. A large part of the investment into this sector has mainly been through government projects and schemes. Standard & Poor's, the ratings agency, said that of the Gulf States, Qatar and the UAE are least vulnerable to price shocks, while Oman and Bahrain are most at risk.
Qatar's Emir has given a statement saying that the slide in oil prices will have no impact on the country's economy, due to the conservative budget it operates. Some cuts have been made but the 2015 budget had a slight surplus provided oil was around $65. Experts predict that unless there’s a decent rebound in the oil price the Government will likely make further budget cuts for 2016. There have been job cuts in the oil industry but other sectors seem fairly unaffected by the drop in the oil prices. The construction sector is seeking more employees to fast track the projects the nation has undertaken to host the summer Olympics in 2020 and the world cup football in 2022. But if the prices do not rise soon then there might be possibility of further layoffs in the oil and gas industry.
The last few years prices in the Qatar real estate market were booming due to a supply-demand problem, the current layoffs may help in getting to a state of equilibrium with the supply and demand equation. The effect of course is slow and will not show immediately but will trickle down into other sectors only on a long term basis. In the short term the other industries are running at the same pace and even if they are not growing, they aren’t declining either.
Qatar is the "least exposed" out of the six GCC economies to the drop in oil prices, and the research firm does not expect government spending or consumer confidence to be impacted over the coming quarters. So the impact of the oil price in Qatar hasn’t been as adverse as certain sections expected.
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