Qatar's economy - robust or not?

people taking self responsibility. Currently this is the world of no consequences..... I just wonder what they will do when the easy money runs out that underpins the place. I would really like to see Qatar suceed but they have to answer some fundamental questions and the biggest one is who will they give citizenship to. Without people have a stake in the country it has no long term future. (just in case people wonder I currently have no interest in a Qatari passport)

same story in Dubai, as you know they are in really dire straits but the Government has enacted laws to stop any reporting that "might harm the economy". Also this week they asked hoteliers NOT to talk about the room occupancy situation. Interesting huh, I am shocked the W manager's comments slipped through over here.

My problem with it all is the lack of honesty makes it hard for ordinary people both ex-pats and Qatari's to make any sensible decisions about how they should manage themselves in this deteriorating economy.

From personal experience, I brought a property here, believing the hype and looking around and thinking wow, this place is on the move.It was only after a lot of digging and a general sense that things were not quite as good as "advertised" that I bailed luckily sold the place.

Now though we have the government promising to bail out the banks as they no doubt have absolutely horrendous debts. The local population have taken out massive personal loans, to invest in stocks, property and to buy the ubiquitous land cruisers. What happens now ?

As I mention above will the bail out be seen as a signal for Qatari's not to pay back their loans ? will we see a mass Qatari default.

The emir should right now be telling people to take a bit more personal responsibility, to reign back spending and to tighten their belts.

Instead we have endless positive stories saying everything is going to be fine.

Dubai tried the same tact, they insisted everything was fine and they could avoid the world wide recession. Things were already looking very shaky in 2007, but instead of scaling back projects when they had a chance they continued directly into the eye of the storm.

Now we all know Qatar is not in the same position, luckily Gas will keep paying the bills, but I fear without some serious honesty with everyone in the country then we could one day be facing some serious economic challenges, challenges that no amount of money could solve.

The governments bail-out of the banks shows another problem. The offer the government has made is to buy shares that the banks own on the DSM at prices from the end of February.

Why would they do that unless there were no buyers on the DSM?

Today the DSM lost over 4%, with the banks suffering. No one is buying at the moment, but there seem to be plenty of people who want to sell.

I read Qatar papers...

"govt boost banks"

I read the FT

"govt bails out banks"

I like Qatar but everything is not as rosey as the govt or papers want us to believe.

Hotels are not as full as they say, (and this is worldwide) but they also say they do not want to make the same mistake as the last recession and reduce rates too much and cut their margins...

To be honest avid, I post more from the point of view of being amazed at what doesn't get reported here, or how certain things get reported. I also keep an eye on what's actually going on here, but since I don't work here or pay rent my eye is more on what's going on back home.

Interesting observation you made regarding hotel occupancy. Would be good to see some actual figures to understand how this has changed over the recent months.

As for Rydges - there have been rumours it was going to be shut down due to it's location ever since I arrived here over two and a half years ago, but I guess Rydges could quite feasibly have taken the initiative and done it themselves.

W gets ‘wows’ aplenty

W: Very positive response from visitors

By Peter Townson

The newly opened W Hotel in the West Bay of Doha has received “really positive” responses from visitors in its first week of business, according to the hotel’s general manager Safak Guvenc, who declared that “W loves Doha!”

Guvenc told Gulf Times that although there have been obvious changes in the global market due to the current international financial crisis, the hotel has been very busy since its opening, and is working towards achieving a 45% occupancy rate.

He explained that most hotels in Doha are currently running at a 40% rate, and expressed his belief that the rate of occupancy at the W will continue to rise over the coming weeks.

“This is the first W hotel in the Middle East, and it will act as a flagship,” he said, adding that “so far the response to the hotel has been really positive, and people have been ‘wowed’ as soon as they enter the property.”

It would seem us three are the only ones that actually write about things that actually matter in Qatar. Most of the rest of this site seems to revolve around matters of little or no direct importance to anyone. Am I a Christian or Muslim? Girl in Hotpants in Villagio. I really despair.

Neither of those topics are likely to tell us if we will have jobs by the Summer of if the rents will come down.

Anyway you might have spotted the following article in the Gulf Times. I have bolded the most important point for emphasis. The manager is saying hotels in Doha are running at 40% occupancy. Now I was under the impression that 70% was the figure most often quoted by the local ministry. I also thought that most hotels had to run at about 50% occupancy to actually make any money.

Which brings me to another subject, Rydges. It's pure speculation but could Rydges have pulled the plug on the franchise due to low occupancy and poor financials, rather than the oft told story of it being too close to the Diwan. Article follows in next post. Cheers

I've declared the interest I've earned from UK bank accounts while being non-resident on my last 2 tax returns, and never had a problem. And as I said, they actually refunded me the tax on the interest when I requested they offset my annual allowance against it.

You may not be able to open a new bank account now you are non-resident, but existing current accounts should be ok.

If you were meant to be economically inactive they wouldn't let you rent property while you are a non-resident. Since they have a specific "Non-resident Landlords scheme" they obviously don't mind you doing it!

btw, in any one year you can visit the UK up to 183 days, but the average per year your entire time abroad (up to a maximum of 4 years) mustn't exceed 91 days

hmmm. I think I need to get some advice. Definitely don't want to get on the wrong side of the inland revenue, but would be much happier with our money in a UK bank.

Never heard that one. I kept all my existing accounts open and continue to earn interest on them. You can also offset your annual tax allowance (i.e. the amount of your salary that doesn't get taxed, if you're in the UK) against the tax on the interest. So I currently earn interest which isn't taxed.

tallg, I could be wrong, but aren't we meant to be economically inactive within the UK, as well as staying out of the country for nine months every year?

What do you mean by "lose some of our tax exemptions"?

The problem with UK accounts is the really low interest!

MD

I agree, the banks here are probably not a great place at the moment. At least until the DSM settles and we see whether any will fail.

The difficulty for us is where to put our money. If we put it in a UK account that will protect us from bank collapse, then we'll probably lose some of our tax exemptions. Off-shoring looks increasingly risky.

--nigel

Even the government is not a trustworthy partner. Their decisions might be unpredictable. I will withdraw all my money from the banks!

My favourite bit of the article I have BOLDED emphasis.

Essentially the Government has realised that the banks are all technically insolvent.

The problem with this is how far does it reach in such a small place such as this.

Are the banks being allowed to write off EXTERNAL or INTERNAL losses. Are the banks getting money because they lost money on derivatives in the world markets.

OR much more troubling, are they allowing banks to write off INTERNAL losses. By this I mean a MASS collective QATARI domestic default. Are we now going to see mortgages and personal loans of Qatari's written off ? Will the Qatari's who have built compound that are empty and owe the banks the money now going to have that written off ? What about Car loans and unsecured personal loans ?

In such a small country this pay off could have very serious consequences to inflation and the long term viability of the Country.

DUBAI, March 9 (Reuters) - Qatar launched new measures to support its banking sector on Monday with a government plan to buy banks' investment portfolios in a bid to revive lending and support the economy, sending financial shares soaring.

"The government is studying a system to take these shares from banks, which will help increase lending," Qatari Prime Minister Sheikh Hamad bin Jassem al-Thani said, according to the state-run Qatar News Agency.

The emergency measure, the second in Qatar, underscores how the global financial crisis has smashed hopes that the energy-exporting Gulf Arab region would escape due to its petroleum revenues and massive sovereign savings.

Even Qatar, the one bright spot due to massive exports of liquefied natural gas and growth expectations of around 10 percent in 2009, has not escaped the liquidity crunch, with some bank shares falling around 70 percent in the last 12 months.

Qatar bank shares leapt over 9 percent, driving the Doha bourse up 8.85 percent, its biggest gain since Oct. 14.

"This is great news for the markets," said Haissam Arabi, chief executive of Gulfmena Alternative Investments, a regional specialist hedge fund company.

"By taking away the investment portfolios of the banks, the banks do not have to provision for any losses and can take it away from their books. It boosts their solvency and supports them."

Banks included in the plan are Qatar National Bank, QNBK.QA, Commercial Bank COMB.QA, Doha Bank DOBK.QA, Qatar Islamic Bank QISB.QA, Qatar International Islamic Bank QIIB.QA, Ahli Bank AABQ.QA, and Al Khalij Commercial Bank KCBK.QA, according to a government statement issued by the Doha bourse.

SUPPORT

Qatar's move to support its banks follows a string of measures by other Gulf Arab governments to address the financial crisis and support banks, including rate cuts, deposit guarantees and emergency funding facilities. Already in October, Qatar launched a $5.3 billion plan to buy 10 percent to 20 percent of banks' listed capital to mitigate the impact of the crisis.

"This measure will improve the risk profile of banks and remove volatility in share trading," said Kapil Chadda, managing director of global banking at HSBC Qatar.

"If you compare Qatar to some other countries in the region, Qatar has been the most proactive in taking precautionary measures so that any risk does not snowball."

The share purchase process will be completed before the end of March in coordination with Qatar Central Bank, the government statement said.

It said the price of the investments purchased will be defined according to the cost of the portfolio registered in the banks records on February 28, 2009 minus allocations accumulated by the end of Dec. 31, 2008.

"Such procedures reflect the due concern of the government in the banking sector," the statement said.

Qatari bank officials welcomed the move.

"It brings us market stability, supports us for growth and improves liquidity. It is also going to improve the earning capacity of banks," Doha Bank Chief Executive R Seetharaman told Reuters by telephone.

Qatar, the world's biggest exporter of liquefied natural gas, is expected to be the fastest-growing economy in the Gulf region in 2009.

Its minister of state for energy and industry affairs said in February that the economy should expand about 10 percent this year as it boosts natural gas production.

they can fool the local population with happy stories but its hard to fool the rest of the world when they start looking at the facts. Yes Qatar has a lot going for it and a few stories about things that have not gone so well will not hurt but the media here is too scared of the government.

Typical story with happy ending... 'ten die in road accident due to no seat belts and excessive speed, however the road death toll is predicted to fall this year, yipeee!' .....

Some of the stories I read in the pensiluar or gulf times, (yes they do not deserve capitals) you just couldn't make up......

i hope u know that Qatari riyal is pegged to US dollar.

The oil and gas contracts are in terms of dollars and because of that there is chance of some troubles in Qatar's financial system.

the economy of gulf countries are heavily dependent on real estate and a crash in it will leave many jobless.

It has already started happening in qatar

For example the firing of employees in Qatar steel and in many construction companies

FT talks about concerns in financial centre. Qatar economy is not based on financial market whatsoever, the main GDP driver is Oil&Gas, which are one the more-less secure. Even if the whole financial & investment market dissapears here - Qatar will be fine. However it will not dissapear - the money in the banks belong to Qatar, not US failed institutions. Only the profits of banks because of credit freeze will be on decrease. They still have money coming from operational activities of gas companies.

The nature of gas contracts cushions the impact of the crisis, as the contracts are long-term. Qatar is a safe place people, stop panicing without a reason as this panic and pessimism is the main catalyst of this crisis.

I think qatar's economic outlook is very bleak.

Qatar's economy is heavily linked to real estate and export and in this economic conditions, these will certainly takea hit.

that is why i never keep more than 2000 riyals in qatar

You are so right, Nigel! And I don't know why I read the Peninsula. They tend to speak with "forked tongue."

Mandi

I can't start my day without reading the Gulf Times. "Interesting content"? Not a chance.

But some of the best entertainment money can buy!

I don't. I read the FT article, then went to the local paper websites to see how they reported it, only to find they didn't bother.

I've never bought a paper in Qatar in my life. The amount of interesting content does not justify the money. I used to read their websites but that became too painful due to the poor website design. I don't feel I miss much by not reading them.

tallg, I don't know why you read The Peninsula any more. This morning's front page was like a parody of Pravda before glasnost, but without the humour. Here's the complete front page:

Qatar and Vietnam discuss matters of mutual benefit and cooperation

Large picture of glorious leader's wife.

PM unsatisfied with the rest of the world picking on Sudanese (alleged) genocidal maniac.

THE ECONOMY IS FINE! HONESTLY!

Picture of wise and beneficent PM

Dangerous toys have been banned, therefore children again are safe. No toys are unsafe in Qatar. Honestly. This is the truth.

Conference opens. No, you can't come in. It is private.

Qatar is one of only eight countries where women have a healthy life expectancy that is shorter than men's. Qatar's healthcare for women is brilliant. The best in the world.

Great. If only I can take out my 500 riyals before my bank goes bankrupt. Funny, isn't it. BANKS going BANKrupt.

That's one of the several reasons none of my money is in Qatar.

I worry what would happen if a bank collapses. In many other countries, governments have guaranteed deposits. It hasn't happened here yet and if a crash happened, I think expats would be last on the list for cash handouts.