Qatar Balance of Payments Analysis - Assignment Example

Qatar Balance of Payments Analysis The balance of payment of Qatar of the recent years has been in deficit as a result of large amount import services and current transfers. The balance of trade surplus on goods in Qatar has relatively declined while transfers on capital and other private transfers have generally increased since 1997 (CIA World Factbook, 2013). This has therefore seen the economy of Qatar register a relative deficit in their balance of payment within the period of 1997-2007.Income balance CIA World Factbook (2013) report shows that between the years 1997 and 2007, the income balance of Qatar were very low.

The fact that Qatar relied to very solely on investments in the oil sector lead to very low investment inflows which then kept the income balance of Qatar very low. The income from foreign direct investment was generally low in comparison with that of other countries. The deficit in the income balance of Qatar in 1997-2007 estimated to have averagely $ 2 billion which is responsible for the deficit in balance of payment during that period.Service balance According to CIA World Factbook (2013), statistics on the economy of Qatar shows that the country imports more service than what they export.

Since 1997 to 2007 the general amount of exports from Qatar were estimated to be about $12 billion while their imports were estimated to be about $38 billion. However, their major exports were goods while the service industry contributed small portion of their exports. This therefore led to more imports on the service which then amounted to deficit balance on the services. This then shows that the general services balance of Qatar had been in a deficit before the country took a step to diversify their economy in 2008.

Current transfers The external borrowings of Qatar have also been increasing between the years 1997 and 2007 which was an estimate of about $ 1 billion increase. The increase in the borrowings of Qatar was from both the private and foreign sources. These needed to develop the natural gas in Qatar. This therefore led to the increase in the current transfers of the country of Qatar between 1997 and 2007. With increased current transfers and unfavourable balance of trade on services and income, the country of Qatar has persistently registered a deficit in its balance of payment in 1997-2007.

References listCIA World Factbook (2013). Middle East: Qatar. Web. Accessed May 1, 2014 from https://www.cia.gov/library/publications/the-world-factbook/geos/qa.html.