Is Qatar Economy Favorable for Capital Investment - Essay Example

Is Qatar Economy Favorable for Capital Investment? of Is Qatar Economy Favorable for Capital Investment? Introduction Before entering into the country’s capital market, it is important to analyze the economic conditions of that country. On analyzing the economic factors of the country, investor could make effective decisions that the country economic conditions are favorable or not (Jacque, 2014). Qatar is favorable for potential investors to invest in the capital market due to its growth in GDP. Current economic conditions of Qatar and future predictions will provide reliable information for investing in capital markets. Economic Condition of Qatar The economy of Qatar earns around 50 percent of the total revenue from oil and gas. Oil and Gas are potential products and the two products cover half of the country’s Gross Domestic Product (GDP). The country earns substantial revenues from exporting oil and gas to many countries of the world. The country is progressing for many years due to increasing prices of oil and gas in international market. Oil and gas are the tools that have provided high per capita income in the country. The country has low rate of unemployment that indicates the strong economic position of the country. The country has nearly 25 billion barrels of oil and around 25 trillion cubic meters gas reserves that could be utilized by the country for more than 57 years in future. Qatar economy is represented as a stable economy due to its cautious macroeconomic management and natural resources (Qatar Economy Profile 2014, 2014). Monetary and Fiscal Policy Management The country has practiced tight fiscal policy in the period of 2002-2008 when revenues were mainly generated from oil and gas products. The new projects of Qatar are indicating high growth in economy such as Qatar’s metro system, light rail system and changing infrastructure of the country in near future. Country has inflation so to control it the country adopts tight monetary and fiscal policy. The country has an advantage of low unemployment rate that indicates that tight economic policies are preferred by the country to reduce inflation and retain its economic growth. It is expected that the budget of 2014-2015 will be surplus of 24 billion dollars because of high prices of oil. The monetary and fiscal management are practiced by the government on account of the country’s current economic position (Nafi, 2014). Potential Resources for Growth Oil and gas covers approximately half of the GDP of economy. The energy resources that contribute over 50 percent of the total GDP are potential resources of the economy that will p0rovid much revenue in future. The country has significant resources of natural gas that could be utilized to achieve the goal of the best provider of oil and gas all over the world. Natural resources play an important role in the country’ economy as the effective utilization of these resources will be helpful in future to earn foreign currency reserves and potential investors will attract towards the country (The Heritage Foundation, 2015). Expectation of Boom in the Economy The economy of the country is expected to grow in 2015 due to the increasing demand of liquefied gas. The country is expected to grow the economy up to 7.7 percent next year. The authority is expecting a threat of decrease in oil prices of the country but it is predicted that the prices will not affect the economy due to its fiscal reserves of resources and high quality oil exporter. The country also welcomes foreign investors to invest in other sectors of the economy. According to the economist of the global economy, the country would be able to get the position in less time along with the increase in investments of other sectors of the economy. The country has much potential to recover the position and increase the growth of the economy (Dokoupil, 2014). Political Stability of Qatar It is crucial to analyze the political stability of country before entering into its market. The country having strong political stability attracts foreign investors to invest in the capital market of the country. Qatar has controlled economic system that attracts more investors to invest in the economy as the country trade with many of the European countries as well. The country has much reserve of its natural resources that is the reason of emerging countries having trade with the country. The capital market of Qatar is quite effective for the investors due to low fluctuations in the stocks of the country (The Heritage Foundation, 2015). Gross Domestic Growth GDP of the country almost remain high due to the increasing prices of oils and gas. The reason for the growth in GDP is due to large investment made in energy sector. The authority is focusing on other sectors to make policies for investment in them but the export earnings of the country from energy sector amount to 85 percent because core exports products of the country are oil and gas (Qatar Oil & Gas Report, 2015). Inflation in the Economy Inflation is known as rise in general price level of the country. The country has high inflation rate and consumer spending but it is not harmful for them. Inflation is not harmful for the country all the time. The situation is under control by the rich countries because they have the potential to overcome the alarming situations (Dokoupil, 2014). Surplus in Balance of Trade Balance of trade includes exports and imports of the country. The main exports of the country are oil and gas. It is proved from past records that the country enjoys surplus in budget. The country is also expecting surplus in 2015 as the country has much reserves of its natural resources. The prices of oil are increasing continuously due to high prices and Qatar is expecting potential remittances from the exports of oil. The country has predicted that surplus of 24 billion dollars will appear in budget of 2014-2015 (Qatar Economy Profile 2014, 2014). Conclusion The economic condition of Qatar is effective for the investors to invest and get potential returns. The country has strong economic stability and substantial reserves of their core products to meet any drawbacks of the economical factors. The capital market of the country contains huge investors that have invested their money in the stock market. Political stability is also effective along with surplus in balance of trade. Overall economy of the country has the potential to increase the growth of the economy. References List Dokoupil, M. (2014, December 14). Update 1-Qatar predicts booming economy in 2015 despite oil price slide. Retrieved March 23, 2015, from reuters.com: http://www.reuters.com/article/2014/12/14/qatar-economy-outlook-idUSL6N0TY06E20141214 Jacque, L. L. (2014). International Corporate Finance, + Website: Value Creation with Currency Derivatives in Global Capital Markets. Hoboken: John Wiley & Sons . Nafi, Z. A. (2014). Economic and social Development in Qatar. London: Bloomsbury Academic. Qatar Economy Profile 2014. (2014, August 23). Retrieved March 23, 2015, from indexmundi.com: http://www.indexmundi.com/qatar/economy_profile.html Qatar Oil & Gas Report. (2015). Qatar Oil & Gas Report (1), 1-21. The Heritage Foundation. (2015). Qatar Economy: Economy, Population, GDP, Inflation, Business, Trade, FDI, Corruption. Retrieved March 23, 2015, from heritage.org: http://www.heritage.org/index/country/qatar Read More