Locals Enjoy Affluent Lifestyles in Doha, Qatar - Article Example

1.1 Locals spend lavishly thanks to windfall from IPOs Source : The Peninsula (Qatar's Leading English Daily), 1/8/2006 Doha: Thanks to money-spinning initial public offerings (IPOs) that have proved a financial windfall for nationals, they are able to spend lavishly on festivities, while expatriates remain heavily weighed down under by the rising cost of living. For an expatriate it is hard to buy a Syrian sheep for sacrifice this Eid Al Adha, whereas a common Qatari can at a time pick 50 such sheep for slaughter for a mass feasting. And, there actually was a Qatari who bought 50 Syrian sheep at the livestock market in Doha yesterday, leaving poor expatriates around him awed and envious. "Well, they can afford to be spendthrift since they have money, thanks to a booming stock market," said one Eritrean who was a witness to the bulk purchase of Syrian sheep by this Qatari at the animal market on the outskirts of Doha. A middle-income Egyptian, on the contrary, had to remain content with two Somali sheep that he somehow managed to buy after a lot of haggling. Al Badri Ali Rislan found the prices of sheep much higher this Eid than last year. "I am married, but I can't afford to keep my family with me due to rising house rents," he told The Peninsula. Expatriates are increasingly buying Australian and Somali sheep as they are much cheaper as compared to Syrian sheep. Mustafa Ahmed Nughmi, another Egyptian, said it was customary for them to exchange gifts with their near and dear ones during Eid Al Adha, but this Eid was different since rising costs were leaving him with no savings. Rents and transport are the largest contributors to inflation, he said. "I took a Karwa taxi to the Industrial Area from the Old Airport locality on Friday evening and I paid QR30 as one-way fare… It is too much," he said. "Where all the orange taxis have vanished. They were a cheaper means of transport," said Nughmi. He was taking a look around the animal market trying to see if he could buy a sheep for sacrifice. Ahmed Ashoor's plight was the same as any other expatriates'. "I have a limited income and liabilities are too many. With rising costs, things are difficult to manage," he said. Even a Qatari national, Yahya Abdul Rahman, felt the sheep were costlier this Eid. He blamed house rents as the single culprit for the rising cost of living and said he had let out four houses to expatriate tenant families and raised rents only marginally. "I have concern for them," he said of his tenants. "Landlords are greedy," he said of property owners, his fellow countrymen. "Rising inflation is not good for all of us." Section: Local News Accessed 1/9/2006 from http://www.thepeninsulaqatar.com 1.2 Commentary The article mainly talks about how locals in Doha, Qatar enjoy affluent lifestyles as opposed to foreign expatriates. Expatriates are people who are temporarily living in another country, the culture of which different from the one they are from. The locals' and the expatriates' economic and financial differences are highlighted during the Eid al-Adha or Feast of Sacrifice, the most important feast of the Muslim. The feast is celebrated by sacrificing domestic animals, particularly sheep. The article narrates how it is easy for an average Qatari to purchase a fair number of sheep, while the foreigners struggle to buy even just one. The local Qataris can manage to be extravagant because of the "booming stock market" especially initial public offerings (IPOs). IPOs are the first sale of stock offered by a private company to the public, stocks being the element of ownership in a corporation. IPOs can only be offered once, many people take advantage of the opportunity. It is typical for the value of IPOs to rise on debut. However, many fall below the offering prices before the year ends. Because of this investing in IPOs are risky, as with all other investments. But even with the booming shares in the Doha Securities Market (up to 98% in 2005), economists raise concern that it might eventually, lead to a crash1. 90% of the Qatar's workforce are expatriates. However, there have always been restrictions about foreigners buying property in Qatar. But new financial statistics confirm Qatar's rising economic status: having the third highest per capita income in the world, it is predicted that Qatar will become one of the richest countries in the world soon2. But the economic growth is also accompanied by a high inflation. Inflation degrades the purchasing power of a unit of currency; this usually refers to consumer prices. Sure enough, according to the article, locals found the prices of sheep much higher this Eid al-Adha, and they attributed the rising cost of rents and transport as the contributing factor. Meanwhile, Qatar is investing its money in infrastructure and housing projects in order to cope with the rising demands. Economists concur that an economy will be better off if inflation is low, and economic policies should aspire for stability in prices. A fast growth without inflation could be possible with higher productivity. An AD-AS framework provides a comprehensive model for inflation: The above figure illustrates the concept of demand-pull inflation, which results with increased demand for goods and services, as is applicable to Qatar's situation. Since the economic growth is strong, consumer income rises and the demand for housing and transportation increase. The demand curve shifts to the right so prices increase (from Po to P1). Overall the article paints a rough picture of Qatar's current economic situation, as experienced by two different groups: the locals, and the foreign expatriates. The article shows examples how how the rising inflation affects certain individuals, however, it might have been better if the nationwide economic effects were also tackled. Also, it did not give any background or even explain why expatriates are not blessed with the affluence the locals were enjoying; it took a little research to find out the circumstances influencing this. The news article is obviously geared towards an audience who already have a knowledge of the local situation. Furthermore, while it is about the IPO's effects on Qatar's economy, it did not say or even hint at what IPOs are. Since foreigners make up a considerable portion of Qatar's economy, it will be beneficial to the country as a whole if the government extend property privileges to them. Also, policies must be enacted to curb the rising inflation. The article did not have a lot of specific details, but overall, it is a balanced piece of reporting, containing commentaries from both sides. Bibliography Cooper, Peter J. "Doha Securities Market: how much higher can share values go?" Middle East Finance and Economy. 23 April 2005. AME Info FZ LLC. 9 January 2006. McInerney, James. "Stocks in the UAE, Qatar: the madness of crowds?" Middle East Finance and Economy. 26 April 2005. AME Info FZ LLC. 9 January 2006. "Qatar per capita income and inflation soars." Middle East Finance and Economy. 4 December 2005. AME Info FZ LLC. 9 January 2006. Read More