The report contains an analysis of Qatar’s financial systems, it’s economy, demographics, Export-Import and trade relations with Finland, EU and rest of the world. The objective of this report is to show the current picture of Qatar’s various economic indicators and analyse Qatar as a potential target market.

1. Analysis of a Potential Target Market - Qatar
Foiz Rahman
Muntasir Islam
International Economics and Finance
IBU2LF001A-12

2. Report
Date 7.6.2016
Author(s)
Foiz Rahman, Muntasir Islam
Degree programme
International Business
Report title
Analysis of a Potential Target Market - Qatar
Number of pages
and appendix pages
13 + 4
The report contains an analysis of Qatar’s financial systems, it’s economy, demographics,
Export-Import and trade relations with Finland, EU and rest of the world. The objective of
this report is to show the current picture of Qatar’s various economic indicators and
analyse Qatar as a potential target market.
Keywords
Emir, Free Trade Agreement, GDP, PPP, Cumulative index

3. Table of contents
1 Introduction-------------------------------------------------------------------------------------------------1
1.1 History-------------------------------------------------------------------------------------------------------1
1.2 Geography & Population--------------------------------------------------------------------------------1
1.3 Government & Politics-----------------------------------------------------------------------------------2
2 The Economy----------------------------------------------------------------------------------------------3
2.1 Basic Overview--------------------------------------------------------------------------------------------3
2.2 Economic Indicatiors-------------------------------------------------------------------------------------4
2.3 Government Budget--------------------------------------------------------------------------------------6
2.4 Current Account-------------------------------------------------------------------------------------------7
2.5 Production by Sector-------------------------------------------------------------------------------------7
2.6 Financial Sector-------------------------------------------------------------------------------------------8
2.7 Industry------------------------------------------------------------------------------------------------------9
2.8 Economic Forcast-----------------------------------------------------------------------------------------9
3 Foreign Trade & Trade Policy------------------------------------------------------------------------10
4 Qatar & EU------------------------------------------------------------------------------------------------12
5 Qatar & Finland------------------------------------------------------------------------------------------12
6 Concluding Remarks-----------------------------------------------------------------------------------13
7 References------------------------------------------------------------------------------------------------14

4. 1
1 Introduction
Qatar, officially known as ‘State of Qatar’ or ‘Dawlat Qatar’, is a sovereign country in the
Middle Eastern region of Asia. It shares land border with Saudi Arabia to the South and the
Persian Gulf to the Northeast. The name of the capital is Doha. With the abundance of
natural resources, Qatar is the richest country in the world in terms of Gross Domestic Pro-
duct (GDP) based on purchasing-power-parity (PPP) per capita. (1)
1.1 History
Ruled by the Al Thani family since the mid-1800s, Qatar transformed itself from a poor
British protectorate noted mainly for pearling into an independent state (1971) with signifi-
cant oil and natural gas revenues. During the late 1980s and early 1990s, the Qatari
economy was crippled by a continuous siphoning off of petroleum revenues by the amir,
who had ruled the country since 1972. His son, HAMAD bin Khalifa Al Thani, overthrew the
father in a bloodless coup in 1995. In the 2000s, Qatar resolved its longstanding border
disputes with both Bahrain and Saudi Arabia. As of 2016, oil and natural gas revenues had
enabled Qatar to attain the highest per capita income in the world. Qatar has not experien-
ced domestic unrest or violence like that seen in other Near Eastern and North African
countries in 2010-11, due in part to its immense wealth. In mid-2013, HAMAD transferred
power to his 33-year-old son, the current Amir TAMIM bin Hamad - a peaceful abdication
rare in the history of Arab Gulf states. TAMIM has prioritized improving the domestic welfare
of Qataris, including establishing advanced healthcare and education systems and expan-
ding the country's infrastructure in anticipation of Doha's hosting of the 2022 World Cup.
1.2 Geography & Population
Since Qatar is a country in the middle east region, most of its land consists of a low, barren
plain, covered with sand. To the southeast lies the Khor al Adaid (Inland Sea), an area of
rolling sand dunes surrounding an inlet of the Persian Gulf. Winter is arid, mild and pleasant
while Summer is very hot and humid. Qatar, with its area of 11,568 km2 is one of the smal-
lest nations in the world. Its no surprise that Qatar doesn't have any forest land and its
agriculture land is also very little of only 5.6% of total land area. Population is around 2.16
million with a density of 176 per square KM, of which, majority of the working-age population
is migrant workers and foreign expats. Qatar’s population can easily be divided into 3 large
groups, of which 50% is of Arab origin, 40% South and Southeast Asian and around 10%
is of Western descent. Majority of the people are Muslim (78%). Median age of Qatar’s
population is 32.8 years, with a growth of population of just over 3% and life expectancy is

5. 2
around 79 years for a person. Official language is Arabic, although English is also used as
a second language. (12)
1.3 Government & Politics
The political system of Qatar is an absolute monarchy, with the Emir of Qatar as head of
state and head of government. The current Emir, or the head of state is Tamim bin Hamad
Al Thani, who is in charge since 2013, when his father, Emir at that time handed over the
power to him. (2)
The system of government in Qatar is based on the separation and collaboration of powers.
The executive authority is vested in the Emir and the Heir Apparent, who are assisted by
the Council of Ministers as specified by the Constitution, while the legislative authority is
vested in the Advisory Council. The Emir is the Head of State and represents the country
internally, externally and in all international relations. He is also the Commander-in-Chief of
the armed forces. The Emir is assisted by the Council of Ministers, or Cabinet, Prime Min-
ister and six supreme councils. The Emir appoints the prime minister and ministers. The
cabinet is formed by an Emiri Decree based on the proposal of the Prime Minister. The
responsibilities and authorities of the ministers and government departments are specified
according to the law. Ministries and other government agencies are responsible for execut-
ing public policies and programs relevant to them. (3)
Sharia Law is the main source of Qatari legislation according to Qatar's Constitution.
Sharia law is applied to laws pertaining to family law, inheritance, and several criminal acts.
Stoning and flogging are used as some forms of punishment. (Cavendish, Marshall. World
and Its Peoples: Arabian Peninsula. p. 64) (13). Qatar retains the death penalty, mainly for
threats against national security. Qatar has membership to several organizations, which
includes UN, IDB, OIC, OPEC, UNESCO, WHO, WTO etc.

6. 3
2 The Economy
2.1 Basic overview
Qatar has prospered in the last several years with continued high real GDP growth, but low
oil prices have dampened the outlook. Qatar was the only Gulf Cooperation Council mem-
ber that did not experience a budget deficit in 2015, but it projects a $12.8 billion deficit, 6%
of GDP in 2016. Oil accounts for more than 30% of GDP, roughly 80% of export earnings,
and 58% of government revenues. Proved oil reserves of 15 billion barrels should ensure
continued output at current levels for 23 years.
Before the discovery of oil Qatar’s economy depended on fishing and pearl diving recour-
ses. Now it depends on oil and natural gas. Petroleum and liquefied natural gas are the
cornerstones of Qatar's economy and account for more than 70% of total government re-
venue, more than 60% of gross domestic product, and roughly 85% of export earnings.
Proved oil reserves of 15 billion barrels (588,000,000 m3) should ensure continued output
at current levels for 23 years. Oil has given Qatar a per capita GDP that ranks among the
highest in the world. Qatar's proved reserves of natural gas exceed 7000 km3, more than
5% of the world total and the third-largest reserves of any country in the world.
Here are some of the statistics related to the economy of Qatar:
*Source: CIA World Fact Book (4)

7. 4
2.2 Economic Indicators
Gross domestic product (GDP) - GDP measures the value of finished goods and services
of a country. Qatar's GDP per capita is $96,732.40 which puts Qatar in the top 10th percen-
tile in the world. A high GDP per capita suggests that economic productivity levels and
standards of living are also amongst the highest in the world. On the national level, GDP is
$212B which is 15 times higher than the world median ($14.4B). Qatar is now ranked 5th
among the countries in terms of GDP. (5)
Countries with Highest GDP Qatar’s GDP per capita over time
*Source: World Bank* (4)
GDP growth rate of Qatar has been following an upward trend over time and it will likely to
be this way in next 5 years.
GDP Projections
*Source: IMF: World Economic Outlook. As of April 2016 (5)

8. 5
Inflation Rate - Inflation rates based off of the consumer price index measures the rate a
set basket of goods and services rise or fall. As of 2015, Qatar's inflation rate of 1.6% is at
a healthy inflation rate.
Inflation Rate Over Time
*Source: IMF: World Economic Outlook. As of April 2016 (5)
Unemployment Rate - Qatar's extremely low unemployment rate of 0.4% amongst the lo-
west unemployment rates worldwide is 6.60% lower than the world average (6.90%). Low
unemployment rates signify a healthy economy by generating high production and lesse-
ning strain on government support for the out-of-work population.
Of the unemployed in Qatar, 21.3%
have faced continuous periods of
unemployment that extend for a year
or more. Females are more likely to
encounter long-term unemployment at
22.2% compared to males at 19.3%.
Imports and Exports - Qatar imports
$37.15B in total goods and services,
valued to be approximately 30.46% of
Qatar's GDP. This is 12.01% lower
than all countries in Western Asia
(42.47%) and 15.74% lower than all
countries (46.20%).

9. 6
Export of goods and services total $77.74B or value roughly 69.13% of Qatar's GDP. Com-
pared to other countries in Western Asia, Qatar exports are 26.05% higher than the region
median (43.09%) and at the global level 30.73% higher for all countries (38.41%). In aggre-
gate, the value of imports and exports make up 99.59% of the Qatari GDP. Net exports
indicate a trade surplus of $76.5B, which could lead to increased economic activity in Qatar.
Qatar mainly exports liquefied natural gas, Petroleum products, fertilizers and steel. Some
of it’s main export partners are Japan, South Korea, India, China, Singapore and UAE.
Among imported products are machinery and transport equipments, foods and chemicals.
Qatar mainly imports from US, China, UAE, Germany, Japan and UK.
Exports and Imports of Qatar
2.3 Government Budget
Qatar expects to post a deficit of 46.5 billion riyals ($12.8 billion) in 2016. Before that, Qatar
recorded a Government Budget surplus equal to 16.10 percent of the country's Gross Do-
mestic Product in 2014. Government Budget in Qatar averaged 10.13 percent of GDP from
2002 until 2014, reaching an all time high of 16.40 percent of GDP in 2004 and a record low
of 2.10 percent of GDP in 2010. Government Budget in Qatar is reported by the Qatar
Central Bank.

10. 7
*figures are in percentages of GDP *Source: Qatar Central Bank (6)
2.4 Current Account
Qatar recorded a Current Account surplus of 3173 QAR Million in the fourth quarter of 2015.
Current Account in Qatar averaged 22782.06 QAR Million from 2003 until 2015, reaching
an all time high of 67844 QAR Million in the first quarter of 2013 and a record low of -2127
QAR Million in the second quarter of 2009. Current Account in Qatar is reported by the
Qatar Central Bank. (4)
2.5 Production by Sector
Since Qatar has a high reserve of natural resources, Qatar mainly produces Oil, Natural
gas and Electricity. Qatar is the largest exporter of liquefied natural gas (LNG) in the world,
and the country’s exports of LNG, crude oil, and petroleum products provide a significant
portion of government revenues.
Oil – Qatar has been a member of OPEC since 1961. With proved reserves of crude oil
estimated at 25.2 billion barrels by the Oil & Gas Journal (as of January 2015), Qatar holds
the 9th largest reserves in OPEC and 13th largest in the world. Qatar’s crude oil and lease
condensate production ranks 17th in the world, with most of the country’s production sent
abroad as exports.
Oil production will not long remain at peak levels of 500,000 barrels (80,000 m³) per day,
as oil fields are projected to be mostly depleted by 2023. However, large natural gas reser-
ves have been located off Qatar's northeast coast. Qatar's proved reserves of gas are the

11. 8
third-largest in the world, exceeding 7000 km³ (250 trillion cubic feet). The economy was
boosted in 1991 by completion of the $1.5-billion Phase I of North Field gas development.
In 1996, the Qatargas project began exporting liquefied natural gas (LNG) to Japan. Further
phases of North Field gas development costing billions of dollars are in various stages of
planning and development.
Natural Gas - Natural gas is at the center of Qatar’s energy sector. Qatar remains the
world’s largest exporter of liquefied natural gas (LNG) although production has plateaued
in recent years.
As of January 2015, Qatar had the third-largest proved reserves of natural gas in the world
at 872 trillion cubic feet (Tcf), according to the Oil & Gas Journal.14 Nearly all of Qatar’s
reserves are in the country’s North Field, which is part of the world’s largest natural gas
deposit. Together, Iran’s South Pars and Qatar’s North Field comprise the entire deposit.
Electricity - With one of the fastest growing economies in the world over the past few years,
energy demand in Qatar has risen significantly, particularly electricity demand. All of Qatar’s
current generating capacity is natural gas-fired. between 2000 and 2012, Qatar’s electricity
consumption grew from approximately 8.0 billion kilowatt hours to 32.7 billion kilowatt hours.
To meet rising electricity demand, a result of LNG export expansions and economic growth,
Qatar continues to invest in its electricity generation capacity. Qatar plans to boost genera-
ting capacity from 8.6 gigawatts (GW) in 2015 to 13 GW in 2018 by investing in new gene-
ration capacity at Umm Al Haul and Ras Laffan. These two project expansions will increase
Qatar’s generation capacity by 51% by 2018.
2.6 Financial Sector
The Qatari banking sector managed to escape the direct impact of the global subprime
fallout, but was not altogether unscathed by its aftershocks. But the sector is also facing
issues of liquidity, declining customer confidence and a forced reluctance to lend. In a bid
to strengthen the banks’ positions, the Qatar Investment Authority (QIA) announced in early
2009 that it was willing to take a 10-20% stake in any interested local listed banks by way
of a capital injection, although this was later reduced to 5% stakes and an additional 5% at
the end of 2009.

12. 9
2.7 Industry
The government considers industry to be an integral part of its plan to diversify the economy
and maximize its huge natural gas reserves, which serve as the primary feedstock for the
sector. Industries Qatar (IQ), a producer of petrochemicals, fertilizers and steel, is a regional
powerhouse, surpassed only in size by Saudi Basic Industries Corporation (SABIC), the
Middle East’s largest chemical producer.
Large profit chunks from years past have been channeled into capital investments, which
should help the sector ride out the storm. IQ, for example, is pushing several major expan-
sion projects, worth almost $6bn, ahead.
2.8 Economic Forecast (2017-2020)
The chart below gives an overview of current situation of key economic indicators as well
as where these indicators might go in the future.

13. 10
*Source: Trading Economics (7)
3 Foreign Trade and Trade Policy
A new government was formed in 2013 when the new Emir took over, however no major
policy shifts or changes have been occurred. Qatar continues to encourage an open trade
and investment climate. It also plans to create a more competitive economy by reducing
entry barriers and strengthening competition. As part of its national Development Strategy
it plans to further liberalize trade in services under the GATS.
Consistently posting sizeable budget and trade surpluses, Qatar has seen its trade and
investment activity reach historic highs in recent years, driven by steady hydrocarbons ex-
ports, growing import demand, measured market liberalization and expansion of bilateral
trade relations. Although foreign direct investment (FDI) inflows declined in 2013, FDI out-
flows have skyrocketed, cementing the state’s position as a powerhouse of international
investment. Bilateral trade between Qatar and its largest Asian trade partners saw strong
growth in 2014, most recently when the Qatar Investment Authority (QIA) signed multibillion-
dollar investment and currency swap deals with China. Development of new special
economic zones should see local investment and FDI rise steadily over the medium term,
while a host of planned GCC free trade agreements (FTAs) could see international trade
volumes expand further in the coming years.
Investment law: Foreign investment is governed by Investment Law No. 13 of 2000, which
limits foreign ownership to 49% of a company’s capital. For firms listed on the Qatar Stock
Exchange (QSE), amendments in August 2014 raised the stake foreigners may own from
25% to 49%, subject to state approval, and granted all GCC citizens equal treatment as
Qataris for purposes of QSE stocks. In certain cases and with government pre-approval,
the law allows up to 100% foreign ownership in some sectors, including agriculture, industry,
health, education, tourism, energy and mining.
Opening the financial market: Qatar’s leadership hopes to further develop the financial in-
dustry by introducing legislative reforms aimed at encouraging foreign investment, which
declined sharply in 2013. Foreign ownership of shares on the QSE stands at about 11%,
most of this owned by GCC nationals and local expatriates. Qatar’s Mutual Fund Law No.
25 of 2002 permits expatriates to invest indirectly in the stock market, though foreign inves-
tors are generally not allowed to participate in initial public offerings (IPOs).

14. 11
Bilateral trade: According to the EC, six of Qatar’s top-10 trading partners are East Asian
countries, led by Japan (1st) and South Korea (2nd), with India, China and Singapore taking
fourth, fifth and sixth place, respectively, and Thailand occupying the eighth spot. The EU
is Qatar’s third-largest trading partner, followed by the US (7th), the UAE (9th) and Saudi
Arabia (10th.) In recent years Asian countries have witnessed a host of new investments
and trade deals with Qatar. Cumulative trade with Japan and South Korea reached
€45.65bn in 2013, according to the EC. Japan alone traded some €26.9bn with Qatar in
2013, representing 22.7% of the state’s total trade volume, as well as being Qatar’s biggest
exports destination. As with other East Asian countries, trade between Japan and Qatar
has grown as a result of Qatari oil and gas exports, with goods exports to Japan standing
at €25.79bn in 2013, against €1.1bn of imports from Japan. (8)
Free trade agreements: Qatar has made considerable progress towards signing and joining
new FTAs in recent years. In July 2014 the possibility of establishing a joint free trade zone
with Iran was discussed, while Qatari officials also met with Turkey’s Ministry of Finance to
discuss a potential FTA in February of that year. The state is also poised to benefit from a
number of GCC-Asia FTAs currently under negotiation.
Some of the most important agreements that Qatar has entered into with the international
community include:
- Membership in the World Trade Organization (WTO).
- Membership in the United Nations and its affiliate organizations and authorities including
the Economic and Social Commission for Western Asia (ESCWA).
- Membership in the League of Arab States.
- Pan-Arab Free Trade Area. The other member countries are Algeria, Bahrain, Egypt, Iraq,
Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Palestine, Saudi Arabia, Sudan, Syria,
Tunisia, UAE and Yemen.
- Gulf Cooperation Council (GCC). The other members are Bahrain, Kuwait, Oman, Saudi
Arabia, and UAE. One of the most significant agreements of the GCC is the GCC Common
External Tariff Law No. (41) of 2002 which implements the GCC unified customs tariff in
Qatar. The GCC has also signed trade agreements such as the free trade agreement with
the European Free Trade Association (EFTA).

15. 12
- Bilateral Investment Treaties (BITs) with countries including China, France, Germany, In-
dia, Italy, South Korea and Turkey. BITs are agreements between two countries for the
reciprocal encouragement, promotion and protection of investments in each other's territo-
ries by companies based in either country.
- Double tax treaties. As at January 2012, Qatar had double tax treaties in force with 48
countries, among them are Norway, Singapore, Switzerland, United Kingdom, Luxembourg,
South Korea, India and China. (9)
4 Qatar and EU
The EU is Qatar’s third-largest trading partner and primary import partner, with total trade
between the two reaching an all-time high of around $25.7bn in 2011, before declining to
$21bn in 2012 and around $20.1bn in 2013, according to the EC. EU imports from Qatar
jumped by 128.3% in 2010 to reach roughly $10.5bn, expanding by a further 71.5% in 2011
to around $18.9bn, before declining by 23.8% and 13.2% in 2012 and 2013, respectively,
to rest near $11.9bn – although still more than three times the value of its 2008 imports,
which stood around $4.3bn. Qatar’s EU imports reached a value of $8.1bn in 2013, repre-
senting a little over a quarter (26.3%) of total imports that year.
In announcing the $10bn CITIC deal, the authority also emphasized that it plans to continue
its investments in Europe, having already spoken publically about its intent to further pursue
investments in the UK in February 2014. QIA’s existing UK portfolio includes the department
store Harrods, acquired in 2010 for some $2.3bn, and more than a 25% share of supermar-
ket group J Sainsbury, as well as significant stakes in Barclay’s, the London Stock Ex-
change, the parent company of Heathrow Airport, and half of the Olympic Village apart-
ments. At the end of January 2015 QIA and its bid partner, US investor Brookfield Property
Partners, bought Songbird, owner of London’s Canary Wharf, for $4bn. QIA had already
owned 29% of Songbird, which in turn owned 70% of Canary Wharf Group. (8)
5 Qatar and Finland
Finland-Qatar bilateral relation started in 1970s. Qatar is linked to Finland with diverse re-
lations in the political, economic, commercial and cultural fields. Currently, Finland and Qa-
tar has a signed agreement on avoidance of double taxation and a memorandum of unders-
tanding and a protocol for consultation (signed between the foreign ministers of both count-
ries in 1998). There is also an agreement on economic, commercial and technical coope-
ration signed in 2002. (Treaty Series Cumulative Index 2201-2250, Issue 41, P. 391) (10)

16. 13
The chart below contains information and a comparison of Qatar’s import to/export from
Finland in last four years:
*Source: Finnish Customs (11) *Numbers in 1000€s
6 Concluding Remarks
Qatar’s healthy trade surpluses, expanding investment portfolio abroad, and growing bila-
teral relations in Asia and Europe have driven growth in its trade and investment. Although
FDI inflows have dropped in recent years, in keeping with wider regional trends, the state’s
favourable tax regime, steady market liberalisation and economic growth will likely see this
change over the medium term. QIA’s rapid expansion into foreign markets has demonstra-
ted the government’s commitment to fostering new bilateral ties and ensuring sustainable
growth for future generations, with new trade agreements expected to further bolster Qatar’s
international trade and economic development.

17. 14
References
(1) https://www.gfmag.com/global-data/economic-data/richest-countries-in-the-
world?page=12
(2) http://www.mofa.gov.qa/en/Qatar/Pages/ConstitutionalAuthorities.aspx
(3) http://portal.www.gov.qa/wps/portal/about-qatar/Government-Legislatives
(4) http://data.worldbank.org/indicator/NY.GDP.PCAP.CD
(5) http://www.imf.org/external/pubs/ft/weo/2016/01/index.htm
(6) http://www.qcb.gov.qa/English/Publications/Statistics/Pages/EconomicIndicatros.aspx
(7) http://www.tradingeconomics.com/qatar/forecast
(8) http://www.oxfordbusinessgroup.com/overview/qatars-new-free-trade-agreements-
boost-cross-border-trade
(9) http://qatar.smetoolkit.org/qatar/en/content/en/53620/Qatar-s-International-Agreements
(10) https://books.google.fi/books?id=tCGmCQHoXC8C&pg=PA491-IA46&lpg=PA491-
IA46&dq=finland+qatar+economic+relations&source=bl&ots=PXItcFHrqB&sig=jHtQf-
BqciutFoUthYfh0EOcKx0&hl=en&sa=X&redir_esc=y#v=onepage&q=finland%20qa-
tar%20economic%20relations&f=false
(11) http://www.rastka.com/importexport/QA_mtb.html
(12) https://www.cia.gov/library/publications/the-world-factbook/geos/qa.html#Econ
(13)https://books.google.fi/books?id=j894miuOqc4C&printsec=frontco-
ver&hl=fi&source=gbs_ge_summary_r&cad=0#v=onepage&q&f=false