Qatar

Qatar has one of the highest levels of GDP per capita in the world, yet the economy relies significantly on hydrocarbon exports. GDP growth is expected to accelerate to +3% in 2024. Investment in the energy sector, including renewables and fossil fuels, as well as a stronger tourism industry and better partnerships with neighboring countries, will drive momentum. Geopolitical instability in the region and trade bottlenecks are downside risks since the majority of exports are shipped through the Hormuz Strait. Average inflation is expected to fall in 2024, thanks to the base effects and lagged effects of previous interest rate hikes. The Qatari riyal is pegged at QAR3.64 per USD1. The peg is likely to stay in place, given the economic stability it provides and Qatar’s significant international reserves to defend it.

The economic acceleration will reflect the government’s willingness to move forward with a variety of new infrastructure projects worth slightly less than USD19.2bn. The Public Works Authority (Ashghal) will play a key role, as the projects cover many sectors and provide potential for privatesector engagement. We also expect the tourism industry to sustain its recent vibrancy – visitor arrivals more than doubled year on year in the first nine months of 2023, reaching 2.9mn. Qatar will host the World Aquatics Championships in February 2024, confirming its ambitions as a worldwide athletic powerhouse and has also expressed interest in bidding for the summer Olympic Games in 2036.

The North Field East LNG expansion project will be a major economic driver, first through significant investment spending until the completion date (2026) and then by fast-expanding liquefied natural gas (LNG) output. Low inflation, along with progressive monetary relaxation, will also help to maintain private spending, while the government’s emphasis on economic diversification will drive stable development in nonenergy sectors.

Qatar’s foreign policy is based on counterbalancing partnerships that strengthen its regional strategic position and serve as a backup for regime security. After the Saudiled blockade in 2017, the limelight provided by the football World Cup, increasing strategic relevance as a natural gas supplier and glimmers of stability and cohesion in the region between 2021 and October 2023 have reduced the likelihood of similar events occurring in the near future against the country. Relations between Qatar and its Arab neighbors, Saudi Arabia, the UAE, Bahrain and Egypt, have improved in a pragmatic manner. Property rights, a clear taxation system and fiscal health remain sound; on the other hand, judicial effectiveness and business and labor freedom present room for improvement.