Comparison of Qatar and Kuwait - Case Study Example

COMPARATIVE STUDY OF TWO COUNTRIES In the Middle East, the countries with the highest GDP per capita are Qatar and Kuwait.Qatar covers a land of 11571 square kilometers. It is ranked the third in terms of reserves of oil and natural oil. According to The World Bank Report, termed as a country with a high income and is ranked 19th globally when it comes to peace. The country has a population of approximately 2.051 with unemployment rate of less than one percent of the total employable population. As of 2011, the per capita income of Qatar was approximately $89,736 with oil and natural gas being the major contributors of the GDP. The country recorded an account surplus of 29.5 percent of its GDP in 2012 (IMF, 58). The rate of inflation in Qatar is approximately 3.7 percent and it keeps on declining as time goes by. The country also has major industries, which include the mining and manufacture of oil. The industries are mainly dominated by the metro chemical sector and more people specialized in that sector. In the financial crisis of 2009, the country put in place policies that were aimed at protecting its banking sector. The country therefore formulated a policy which allowed direct investments in the domestic banks. In 2011, there was a boom in its GDP following the increase in the global price of oil. The country also made some investments in the gas sector that lead to a great increase in its GDP in 2011 (Mundi.com). Kuwait on the other hand come the second economy in the Middle East. The country has a size of 17820 square kilometers. The country also freely rode on the 2010 rise in the global prices of crude oil that brought about great increase in its GDP (Mundi.com). The country dedicates more than 55 percent of its savings as of 2010. It has a population of 4.46 million and had a GDP of 51 billion with an inflation rate of less than 3 percent. The major economic activities include manufacturing, agriculture and service industries. The major economic driver of Kuwait is its free laws that govern business and industrial operations. This attracts more investors and businesspersons. The country had a per capita income of $81,800 as of 2011. The country has various expatriates in different fields. The growth between 2005 of Kuwait and Qatar The growth exhibited by the two countries is as shown in the tables below. 1. Qatar growth( The figures are in billion Dollars) Year current Prices Percentage Constant prices Percentage Per capita Percentage 2005 43.04 26.4 26.455 7.06 156.666 26.41 2006 60.496 28.85 31.376 15.68 220.208 28.86 2007 79.546 23.94 37.023 15.25 289.551 23.95 2008 115.02 30.84 43.577 15.04 418.672 30.84 2009 97.583 -58.86 48.806 10.71 355.205 -17.87 2010 127.332 23.36 56.908 14.23 463.49 23.36 2011 172.982 26.39 67.606 15.82 629.653 26.39 2. Kuwait growth (The figures are in billion Dollars) Year current Prices Percentage Constant prices Percentage Per capita Percentage 2005 80.797 26.43 13.227 9.59 23.593 25.75 2006 101.561 20.44 13.915 4.94 29.47 19.94 2007 114.722 11.47 14.523 4.19 32.581 9.55 2008 147.402 22.17 15.245 4.74 39.62 17.77 2009 105.911 -39.17 14.46 -5.43 30.478 -30 2010 124.348 14.83 14.953 3.3 35.634 14.47 2011 176.59 29.58 16.178 7.57 48.736 26.88 Eight major economic activities largely contribute to the GDP of the countries In Kuwait, the major among them is the mining and quarrying of natural gas and petroleum. In the period of 2005 and 2011, the highest recorded contribution of the mining and quarrying of oil and natural gas is 61 percent. However, this percentage is on the decline due to the depletion of the reserves of these two natural resources. As of 2011, this percentage had declined to 51.7 percent on oil and 58.3 percent on natural gas. The second important sector is the service sector, which contributes to 15 percent on GDP. Between the period of 2002 and 2011, this sector has been increasing in terms of its share in GDP. Government sector services come third in Qatar contributing up to 20 percent sector on GDP. Agriculture comes forth with a 0.3 percent share with efforts being made to increase it for the purpose of food security. The investment sector also contributes about 42.3 percent of GPD. This sector grew by 25.7 percent in the period of 2002 and 2011. Recreation, which is shown by hosting Asian games led to economic growth of up to 26% in 2006. This sector is to be expanded by 2022 as a means of economic diversification. The construction and the finance sector are also contributors of the country’s GDP. These sectors have been growing with an annual rate of about 0.8% (IMF, 64). Kuwait on the other hand, also has important sectors that contribute to its GDP. Oil is the major GPD contributor with more than 50%. Fears of the depletion of the reserves have led to economic diversification and the emergence of other economic sectors. The important sectors include agriculture comprising of 8% GDP, and the manufacture of fertilizers. Other sectors include shipping, Power generation, investment, water desalinization, and the establishment of plants such as brick and block. Over the past few years, these sectors have been expanding with their GDP impacts also improving (World Factbook, 358). National Saving and Its Growth The Goss National income of Qatar has been increasing tremendously and it stood at 177.5 billion Dollars. This made the country to be ranked at the 50th position. As of that year, the percentage share of the National Income of the country was 0.24%. The annual average growth of the national income of the country has been estimated at 41.5%. The growth of the national income has had a greater impact to that of the national saving (Alazmi, 39). With the efforts to diversify the economy in place, these percentages could greatly improve. There has been a commendable growth on the Gross National Income and the gross savings between 2005 and 2012. The only time the country showed a great fall in the National Savings was in the global economic crisis of 2009 where it grew by a negative margin. The country however came back showing the highest level of growth in 2010 by a rate of 4% (World Factbook, 357). Kuwait on its part also stands as a country with a high national savings in the Middle East. The value had been fluctuating between 1995 and 2004 where it came to pick up and grew at when it grew by a rate of 21.76%. In 2005, the country recorded a value of $34482 of its national savings (IMF, 38). This was the highest value in the gulf region. The most contributing economic sectors were agriculture and its products. The country has been recording a growth in its national savings as more economic sectors are continuously emerging. The country did not record a negative value in its national income due to the global economic crisis. It was only in 2010 when it recorded a lower percentage of 42.2 percent on its GDP. The figures however rose in 2011 to 53% . (Scipes, 103). Qatar Imports and Exports The Major commodities exported by Qatar include liquefied natural gas, fertilizers, steel and petroleum gas. The main export partners are Japan, South Korea, India, Singapore and china. The estimated revenues gained from exports were at $26.93 billion. The exports, especially the oil products greatly affect the GDP of the country when the prices go either up or down. The country has increased in the past years its export service. Normally the exports of goods and services comprises of 78.6% of the country’s GDP . (Scipes, 87). On the other hand, the importation of goods and services provided an annual leakage of 25.5% of the country’s GDP as of 2011 estimates. The major imported products are food, machinery, chemicals, and transport equipment. The country imports its commodities from the United States, UAE, France, Japan, Saudi Arabia, Italy, UK, and Germany. As of 2011, the exports were estimated to cost 26.93 Billion and this amount is likely to grow because of the country’s intention to diversify its economy implying that it will need more machinery and work force. The major infrastructure projects underway due to the country’s intentions to host 2022 world cup include the metro system, light rail system, and the causeway connecting the country to Bahrain . (Scipes, 84). Kuwait Exports and imports Kuwait mainly engages in the export of natural liquids and it is ranked the third after Arabia and Iran. It exports to regions such as the Asia-Pacific, United States, and Europe. The country engages in the export of clean petroleum products due to the major decision it took of refining oils to ecofriendly products. This helped in improving the level of its total petroleum exports. The percentage of exports of Kuwait to other countries are: 18% to South Korea, 15% to India, 14% to Japan, 10% China and 8% to the United States. Other trade partners to Kuwait are Pakistan, The United Arab Emirates, and Saudi Arabia. The percentage exports have some variations in them due to the fluctuating prices of crude oil that affects the volumes of commodities demanded in the global market (IMF, 38). The main imports of Kuwait are machinery which comprise of 24% of the total imports, foodstuff which take 6% of the imports, chemical products which comprise of 9%, base metals by 12%, transport equipment which generally compose of the 14% of the imports. When it comes to import sector, the country has various partner countries which are who take a percentage of the total commodities imported. 12% are from the United States, 10% from china, and 7% from South Korea (Alazmi, 39). The country has been reducing its imports while increasing its exports to increase the surplus amount in its balance of payment. Within a period of 2005 and 2011, the percentage imports were as follows Year 2005 2006 2007 2008 2009 2010 2011 Value 52% 52.38% 49.73% 47.98% 45.03% 42.97% 45.83% Works cited Alzami, Anwar A.-S. Banking, Exchange Rate, and Oil Prices: Essays on the Economy of Oil Exporting Countries. , 2008. Internet resource. IMF. Qatar, 2009. London: Oxford Business Group, 2009. Print. IMF. The Report: Kuwait 2008. London: Oxford Business Group, 2008. Print Mundi.com, . "Kuwait vs. Qatar." Index Mundi. CIA, n.d. Web. 27 Mar 2014. http://www.indexmundi.com/factbook/compare/kuwait.qatar/economy Scipes, Kim. Afl-cios Secret War against Developing Country Workers: Solidarity or Sabotage?Lanham, Md: Lexington Books, 2011. Print The World Factbook 2008. Washington, D.C: Central Intelligence Agency, 2008. Print. (World Factbook, 358) Read More