First with Financial Comment from Arabia

Population of Qatar falls by 5%, growth now in doubt

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The Qatar statistics office yesterday published figures showing a five per cent fall in the emirate’s population between October and November to 1.58 million.

According to Reuters the office offered no explanation for the decline. Is this another PR cock-up from a Gulf State, with some statistical revision responsible for the abrupt change and easily explained away?

Or have 86,803 people left Qatar in the past month? This correspondent visited Doha in this period and the airport did not seem especially busy, and the roads were not jammed with container loads of household goods getting out of town.

Global financial crisis

However, it is possible this figure might represent a population shift over the course of the past year. Since the global financial crisis struck the Gulf last September there has been a substantial impact on all states, even the richest and fastest growing like Qatar.

Until then all the Gulf States were enjoying the liberal liquidity showered on them by global banks keen to lend into an emerging market with a great future. That future outlook remains, if a little dampened by the worst collapse in global trade and industrial output in history, but the banks have pulled in their credit lines.

Indeed, the credit lines were withdrawn so rapidly that even cash-rich Qatar felt the impact and its real estate boom can to a swift end with house prices down more than 30 per cent since then.

Clearly a section of the expatriates who were employed in the sectors impacted by the global financial crisis have gone home. Hence the fall in population can be explained.

But why not admit it and get over it, rather than trying to pretend that all is well and that nothing has happened? Qatar still has the best growth story in the Gulf but even the brightest star has dimmed in the global credit squeeze.

Forecasts now wrong

Have the economists then got it wrong with their growth targets for this year and next? Is economic activity slowing or growing in Qatar?

The population trend is normally a key indicator. You can not sell more consumer products, for example, into a market that is shrinking. Nor will demand for housing grow if the population is not there.

This is actually a phenomenon across the Gulf States these days. The dependence on expatriate labour is also a key source of domestic demand, and sending that labour home has an instant and unavoidable impact.

On the other hand, other countries now have lengthening queues of unemployed peopled to subsidize – some of them back from the Gulf – and the region does not have this problem. That should assist the Gulf in its eventual recovery from the crisis.


Written by Peter Cooper

December 7, 2009 at 8:33 am

Posted in Banking, Oil Prices, Qatar

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