Economic studies
Qatar

Qatar

Population 2.6 million
GDP per capita 68,622 US$
A4
Country risk assessment
A3
Business Climate
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Synthesis

major macro economic indicators

  2020 2021 2022 (e) 2023 (p)
GDP growth (%) -3.6 1.6 5.0 3.0
Inflation (yearly average, %) -2.7 2.3 3.5 3.0
Budget balance (% GDP) 1.3 4.4 10.0 9.0
Current account balance (% GDP) -2.0 14.7 22.0 20.0
Public debt (% GDP) 72.6 58.4 47.0 43.0

(e): Estimate (f): Forecast * includes inv income from SWF **Fiscal year: 1 April - 31 March ***general government gross debt

STRENGTHS

  • World’s 3rd-largest natural gas reserves, sizeable oil reserves
  • Low public debt, strong public accounts
  • A richly-endowed sovereign wealth fund: Qatar Investment Authority (QIA)
  • Social and domestic political stability
  • High per-capita income
  • Business friendly environment
  • Predictable monetary policy

WEAKNESSES

  • Small economy, mostly dependent on hydrocarbons for growth, fiscal and external balances
  • Exposure to volatility in energy prices

RISK ASSESSMENT

Activity growth to mildly decelerate

After a strong growth in 2022 amid elevated natural gas prices and the Soccer World Cup, the Qatari economy is expected to continue to expand in 2023, although at a slower pace, in line with global stagnation risks. Moreover, large fixed investments related to the World Cup held in November-December 2022 will have been completed. However, economic authorities are set to implement the Vision 2030 diversification plan which is estimated to support private sector investments. Rising per-capita income will continue to support private consumption that accounts for nearly 20% of GDP. The non-oil sector such as services and construction will continue to fuel GDP, but the key contributor will remain hydrocarbon revenues (nearly 40% of GDP). While oil production is expected to inch up by around 0.5% in 2023, gas production is due to rise by 2% to around 183 bcm after an increase of 3% in 2022. Although the emirate is investing in new LNG production to increase its share of global production by selecting international partners, the positive impact of new investments will need some time to materialise. Pent-up demand unlocked after the COVID-19 pandemic combined with the positive impact of the Soccer World Cup 2022 will continue to raise tourism revenues as total arrivals are estimated to rise by around 40% in 2023, and tourism revenues to jump to 10% of GDP from around 5% on average between 2010 and 2020. Growth in transport infrastructure is estimated to decelerate but expansion in the energy and utilities sub-sector is due to continue given Qatar’s water scarcity. Inflation will remain above pre-pandemic levels, although it will ease in 2023 thanks to tighter monetary policy implemented in line with the US Fed’s steps due to the currency peg, and slower private consumption after the end of the World Cup. However, upside risks remain owing to globally elevated food prices.

 

Current account and budget surpluses to narrow slightly

Lower hydrocarbon prices resulting from the global economic slowdown are expected to crimp Qatar’s fiscal surplus in 2023, with hydrocarbon revenues accounting for around 60% of the total. Indeed, Qatar’s natural gas sales are historically tied up in medium- and long-term contracts, particularly with Asian clients. Qatar exported nearly 70% of its LNG to Asia in 2021 compared with 67% in 2017, while Europe’s share declined to 21% from 23%. This may dampen hydrocarbon revenues. Meanwhile, non-hydrocarbon revenues are rising on the back of higher corporate revenues in line with the surge in tourist inflows. By contrast, the government is expected to continue uphold fiscal discipline on the expenditure side, particularly in line with the completion of World Cup-related projects. The latter also contains goods imports necessary for construction projects. Lower hydrocarbon prices and moderate growth in gas and oil production will weigh on export revenues (hydrocarbon accounting for nearly 90% of total goods exports). In the meantime, the hosting of the Asia Cup football tournament and World Horticultural Expo in 2023 will support tourism inflows that will help to offset the narrowing of the surplus in the goods trade. Total assets in Qatar Investment Authority (QIA) is estimated at around 200% of GDP and its overseas investments include various sectors such as sports, entertainment, media, ports, real estate, retail, airports, etc. This approach helps the emirate to spend the external surplus while increasing the country’s prestige and generating further investment income.

 

Political stability set to continue

Political stability in Qatar is not threatened as the local population is mostly satisfied with its quality of life and living standards, partly on the back of social expenditures. No known faction exists on the political stage as the government stands united behind the Emir who appoints it. Qatar has been able to establish balanced diplomatic relations with various countries, including Iran, which has helped the emirate and provided daily supplies of medication and goods during the Saudi- and UAE-led boycott between 2017 and 2021. That said, further improvement of these ties may create tensions with the rest of the Gulf states and the US, which has a military base there. Economic and trade relations between Qatar and Egypt, which was also a part of the boycott, continue to improve and should result in more investment opportunities for both countries, with the QIA reportedly holding talks to purchase stakes in some Egyptian state-owned companies.

 

Last updated: February 2023

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