Diversification Bearing Fruit

With the price of oil heading steadily downwards, Qatar can be glad that its future lies not in one natural resource but in two.

In the past Qatar has suffered in the wake of falling oil prices, and many government teachers can still remember their wages suddenly being slashed in half due to plunging government revenues.

Qatar has not been resting on its laurels. They have seen Saudi Arabia's income plunge in the past due to its booming population and poor use of its oil revenues, and have no intention of following in their larger neighbour's path.

Additional streams of revenue lie in dividends from the huge investments it has been making overseas, and in nurturing alternative industries.

With the development of a huge new airport, the expansion of the country's national airline and the huge growth in hotel rooms tourism is one obvious target - although, in contrast to Dubai, the country is more focussed on providing short breaks and stop-overs than on traditional holidays.

Economic liberalisation and the rewriting of a number of laws since the accession of the current Emir - including one allowing foreign ownership in a number of designated areas - have also helped foreign investment in the country explode. Between 1990 and 1999 foreign direct investment averaged 150 million per annum - in 2007 this hit 1.14 billion.

While much of this investment has been in the petrochemical areas, Qatar has been keen to encourage investment in other areas, as well as the essential services needed to maintain a growing expatriate population in Qatar.

Many of the new industries being encouraged by Qatar are under the umbrella of Industries Qatar. These include Qatar Steel and Qatar Fertiliser company.

Aided by cheap supplies of Natural Gas, these diversification efforts are now starting to bear fruit, with Industries Qatar's profits increasing to 18 billion dollars in 2007 (Menafm.com).

How these profits will withstand the pressure of the downturn remain to be seen. Yet in the long term Qatar looks set to consolidate its position as one of the richest countries of the world.