Qatar’s economic growth normalised this year, after the World Cup-driven boom in 2022, the International Monetary Fund has said.
The Gulf state’s economy, which expanded nearly 5 per cent last year, “will continue to normalise”, with its gross domestic product expected to rise by about 1.75 per cent per annum during 2023-25 period, IMF officials said after consultations with Qatar.
While continued normalisation is expected in the near term, the country’s economy has a strong medium-term economic outlook, which is supported by a rise in liquefied natural gas production and Qatar's efforts for economic reforms.
“The medium-term outlook remains favourable, with the non-hydrocarbon sector growing at 2.75 per cent, driven by domestic demand, including from the construction of the North Field expansion project, and robust tourism, boosted by the global visibility brought by the 2022 Fifa World Cup,” said Ran Bi, who led the IMF team.
The overall medium-term economic growth is set to increase to about 5 per cent per annum, the IMF said.
Earlier this month S&P Global Ratings said it expects economic activity in Qatar to slow to 2 per cent in 2023 after close to 5 per cent expansion in 2022.
The rating agency forecasts the country's growth momentum to strengthen again through 2026, bolstered by investments and hydrocarbon production increases in line with the North Field expansion.
Between 2025 and 2027, the Qatari government plans to increase LNG production capacity by 64 per cent, to 126 million tonnes per year, from the current 77 million tonnes.
This will add to Qatar's fiscal strength, the rating agency said.
“The stable outlook reflects our view that Qatar's fiscal and external buffers should continue to benefit from the country's status as one of the world's largest exporters of LNG over the next two years,” it said.
Qatar's inflation has declined following monetary policy tightening in tandem with the US Federal Reserve.
The IMF projects inflation to moderate to 2 per cent, and the fiscal and current accounts are to remain in surpluses over the medium term. The lender sees overall risks to the economic outlook as “broadly balanced”.
“Broad fiscal discipline amid sizeable hydrocarbon windfalls in 2022–23 has strengthened fiscal position significantly and is commendable,” said Ms Bi.
The IMF expects sustained fiscal prudence, revenue diversification and enhanced spending efficiency to drive Qatar's medium-term fiscal strategy.
Qatar’s Third National Development Strategy (NDS3) aims to accelerate the economic transformation towards a knowledge-based and inclusive economy supported by private-sector-led growth.
The IMF team welcomed the continuing efforts to enhance spending efficiency, including through the implementation of programme-based budgeting, and to increase transparency.
“Medium-term priorities include accelerating revenue diversification through further mobilisation of non-hydrocarbon tax revenues, enhancing spending efficiency and reorienting public investment to facilitate private sector growth,” she said.
Qatar “is at an important juncture” in shifting its growth model from one that is led by the state to a more dynamic and market-oriented one driven by the private sector.
“Building on the progress made so far, and guided by upcoming NDS3, reforms should focus on enhancing human capital, labour market dynamism and business environment,” Ms Bi said.
