In recent years, Qatar has undertaken a myriad of investments worth billions of euros in Europe. These included Eurobank EFG, Barclays, Harrods, Salisbury, Credit Suisse, London Stock of Exchange, Energias de Portugal, the Spanish power company Iberdrola, Bajadilla port in Marbella, and many European football teams.

According to the Qatar Investment Authority, the country's sovereign wealth fund, Qatar has assets equal to more than $ 100 billion. Much of this investment is undertaken in Europe in the hope that the European economies will recover from recent debt crises. However, will the European economies recover in a way that the Qatari investments will not be wealth-decreasing ones, and will the current economic mess in Europe have any impact on the Qatari economic growth given the vast investments of Qatar in this part of the world?

Recently, the HSBC has released a report titled "Q1, 2012 growth: Shifting from quantity to quality." The report mentions that, as was expected, the Qatari GDP has sharply declined from 12 percent in 2011 to 6.9 percent in the first half in 2012. The report attributes the sharp decline to reduction in export volume growth since expansion of LNG has leveled off.

According to the report, although Qatar is achieving lower GDP, its quality is improving. Looking on the nonoil sector economic performance, it is up by 9 percent in Q1. Indeed, sectors of construction, transport and communication, trade, hotels and restaurants, and government services have been all performing well. Whereas the best performing sector is that of the government services with a net increase equal to 14 percent, the slowest sector is the construction one with a net increase equal to 6 percent.

More interestingly, the report mentions that one of the major drivers that contributed in this domestic demand increase is expansionary fiscal policy, in particular the increased government spending. Indeed, the projects planned and under way now have been increased by $ 16 billion in the first half of this year making Qatar the third largest project market in the region.

Asked whether the Qatari economy will get affected by the current economic crisis in Europe, Simmon Williams, a senior economist at HSBC Middle East and one of the coauthors of the report, said: "I do not think the Qatari economy will be affected significantly by the current economic imbalances in Europe given the fact that the Qatari investments in Europe are long term ones. I do not even think that the Qatari government diversification policy will change in near future."

Liz Martins, a senior economist at HSBC, said: "The Qatari investments in Europe are mainly targeting at improving the infrastructure in Qatar. As for the economic growth, although it is less than those of the past four years, it is still high and is equal to about 7 percent, which is near to that of emerging countries in Asia. The unnatural growth that happened in Qatar during this period is attributed to increased demand on Qatari LNG imports. In addition, the development projects in Qatar are mainly financed through local banking systems and not through European ones that may get affected by the crisis." In fact, according to the report, the public sector deposits were increased by 20 percent YoY in April 2012 increasing credit to the public sector by 80 percent YoY. On the other hand, the private sector credit has slowed but still remains healthy at 14 percent YoY in April.

In conclusion, the Qatari economy is slowing not because of economic crisis in Europe but because of decreasing LNG exports. It is also expected that the Qatari diversification policy with respect to investment in Europe will not change in near future since they are long term ones.