Qatar's economy rebounds after post-World Cup dip, IMF says

GDP projected to grow by 2 per cent in 2024 before increasing to about 4.75 per cent in medium term

The World Cup trophy is lifted by Argentinian footballer Lionel Messi in Lusail, Qatar, in 2022. Reuters

Qatar's economy is showing signs of rebounding after a year in which it moderated after the 2022 Fifa World Cup, the International Monetary Fund said on Monday.

Qatar's near-term economic growth is expected to reach 2 per cent before rising to about 4.75 per cent in the medium-term, the IMF said at the end of its Article IV consultation.

This follows two years of slowing growth. Qatar's gross domestic product declined from 4.2 per cent in 2022 to 1.2 per cent last year largely due to fewer construction activities and services growth after the World Cup.

Meanwhile, headline inflation is projected to ease to 1 per cent this year before converging at about 2 per cent.

“Following the post-World Cup growth moderation in 2023, Qatar’s economy has shown signs of a gradual rebound,” the IMF said in a news release.

Despite this, tourism has “strengthened significantly” since Qatar hosted the world's most prestigious international football tournament.

Qatar welcomed 4 million visitors by the end of October 2024, representing a 26 per cent increase in international visitors compared to the same time last year, according to the country's tourism bureau. Visitors from the Gulf accounted for 41.8 per cent of all tourists. India, the UK, US, Germany and China are also included in the top 10 visitor markets, the bureau said.

Qatar's medium-term growth is expected to be supported by “significant” liquefied natural gas production and the country's third National Development Strategy (NDS3) reforms, the IMF said.

As part of its efforts to diversify its economy, Qatar made the long-term decision to increase its LNG production from 77 million tonnes per year to 142 million tonnes per year by 2030, representing an 85 per cent increase in production.

Qatar also in February announced plans for a new North Field expansion that would contribute to 16 million tonnes of LNG annually as part of its current plans. That will follow two phases of Qatar's LNG expansion plans – the North Field East and North Field South projects – according to state-owned QatarEnergy.

Qatar was one of the world's largest LNG producers last year alongside the US, Australia, Russia and Malaysia, according to the US Energy Information Administration.

The IMF said it was also encouraged by momentum from Qatar's NDS3 programme in shifting to a “more knowledge-based and private” outlook.

NDS3 is part of Qatar's economic diversification plans by attracting foreign investment, building a strong labour force and establishing the country as a leader in business environment and digital competitiveness.

Among the ambitious targets set to be achieved under the programme by 2030 include growing the economy by an average of 4 per cent and attracting $100 billion in foreign direct investment.

“Priorities are to build a highly skilled labour force, foster innovation, promote trade diversification, FDI and domestic knowledge spillovers, and further enhance business efficiency,” the IMF said. “Achieving Qatar’s vision to shift from a state-led growth model to a more knowledge-based and private sector-driven one requires enhancing human capital and economic complexity."

The IMF also said Qatar's fiscal position is consistent with the level needed to provide “inter-generational equity”, despite using some fiscal space last year to support its economy. The multilateral lender anticipates Qatar will implement “broadly prudent” plans in its 2025 budget.

“The extension of the medium-term budget to cover five years and progress in implementing program-based budgeting are commendable,” the IMF said.

“The positive economic outlook provides an opportunity to accelerate revenue diversification, especially to introduce a value-added tax, enhance spending efficiency and gradually align domestic and export energy prices, and reorient public spending to facilitate private sector growth.”

The IMF's executive board is scheduled to discuss the Article IV consultation in January.