The hotel lobbies and restaurants of Doha are still buzzing with the sound of business meetings, unlike most other cities in the Gulf. “There is no sign of a recession in Doha,” says one visiting banker.
The glut of cash that was causing problems for Qatar’s economy in mid-2008, leading to inflation reaching more than 16 per cent, has now become one of its saving graces.
The robust cash position of Qatar’s banks, regulated closely by a tough central bank, means the country’s banking and finance sector has avoided the recent ratings downgrades that have hit other markets in the region.
The Qatar Investment Authority’s willingness to buy minority stakes in the country’s banks demonstrates the strength behind Doha’s financial institutions, and provides further evidence that it could avoid the worst of the global economic turmoil.
Qatar’s hydrocarbons wealth is another boon; the government has entered into a series of long-term contracts to export liquefied natural gas (LNG), and has committed to increasing production by about 50 per cent this year.
In the longer term, LNG production is forecast to reach 77 million tonnes a year (t/y) by 2010, from about 35 million t/y in 2008, and the huge wealth being generated by the country’s gas exports should offset any impact from the global economic downturn.
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Comment: Doha right to focus on gas