Thanks to its strong fiscal reserves, continued flow of revenue from gas exports and the financial sector’s relatively low levels of exposure to the markets in the US or Europe, Qatar is better placed than most of its neighbours to weather the current economic downturn.
According to the IMF’s latest projections, issued in early May, the Qatari economy will expand by around 17% this year, compared to the predicted 2.6% for the whole Middle East and North African region.
As such, Qatar does not have to try and spend its way out of recession or go to the other extreme and cancel major infrastructure developments.
Though the Qatari economy is underpinned by the hydrocarbons sector, the state is planning for a time when this emphasis on energy will diminish as reserves dwindle, with Qatar estimated to have supplies to meet present demand for up to 100 years.
The Qatar National Vision 2030, the blueprint for the social and economic future of the country released at the end of October, stressed the need for a diversified and competitive economy that would gradually reduce its dependence on the hydrocarbons sector, with an enhanced role for the private sector and an expanded place for industries and services within the economy. One of the criteria for achieving these goals was having “a world-class infrastructure backbone”.
Current estimates put the budget for Qatar’s four major transport infrastructure projects at $21.6bn. While the country already has an extensive transport network, this is being rapidly expanded to meet the present and future needs of the economy. Among these developments is a $2.7bn causeway that will link Qatar with the island state of Bahrain, and with a length of more than 40 km be the longest such link in the world; the construction of the New Doha International Airport, which when completed in 2015 will be able to handle 24m passengers a year; and a massive new port project at Mesaieed, 35 km from the capital.
Of equal importance to these schemes, and one that will strengthen Qatar’s bid to gain an increased slice of the Gulf logistics market, is the country’s first foray into rail. In August, German firm Deutsche Bahn was awarded a $1.1bn consultancy by Qatari Diar to design the country’s first rail network, a grid encompassing a light people-mover system in and around Doha, along with heavy freight and mainline passenger services.
The fully integrated network foresees a passenger and freight railway along the eastern coast linking the Ras Laffan industrial complex with Doha and the Mesaieed sea port; a high-speed link from the new international airport to central Doha and across the planned causeway and bridge to Manama in Bahrain; a freight link to Saudi Arabia; a six-line metro system in Doha; and a 140 km light rail connecting urban centres Lusail, Westbay and Education City.
All of these projects are designed to work towards Qatar’s national vision of a broad-based economy that is moving away from dependence on energy. By expanding its domestic transport infrastructure and through linking the network to the surrounding Gulf states, Qatar is positioning itself as a major cargo-handling centre for the region.
According to a recent report issued by Business Monitor International, Qatar’s freight industry is set to expand by an average of 8.1% a year up to 2011, with air cargo movements expected to increase by 9.3% on the back of the expansion of national flag carrier Qatar Airways’ freighting capacity. It is notable that this growth is predicted to take place before most of the new transport infrastructure projects come on-line.
Qatar is by no means alone among the Gulf states in seeking to build up its transport infrastructure as a means of supporting the economy, with most of its neighbours either carrying out or planning ambitious building programmes. However, the emirate has the advantage of being able to follow through with its plans more quickly and in a relatively stable economic environment, a factor that could give it a considerable advantage in the Gulf’s future transport race.
