Dubai, UAE — The International Monetary Fund expects Qatar’s real GDP to grow by 2-2.5 percent in 2023-24 on robust domestic demand and the ongoing LNG expansion, with inflation moderating gradually to around 3 percent.
It said that after very strong growth in 2022 boosted by the World Cup, the economy is expected to normalize in the near term while the outlook remains relatively favorable, the IMF said in a statement that was issued at the end of a visit to Doha by an IMF team, led by Ran Bi, from May 2-11.
“Medium-term growth is likely to rise to around 4–4½ percent after the North Field expansion starts boosting LNG production. Aided by buoyant export revenue and public spending, the fiscal and external current accounts are projected be in surpluses throughout the medium term,” the statement said.
“A decade of the nation’s efforts to diversify the economy culminated in the successful hosting of the 2022 FIFA World Cup. Qatar managed the COVID-19 pandemic well, providing a safe environment for the first major global sport event since the pandemic. Qatar is well placed to leverage the top-notch infrastructure built and capitalize on the momentum and visibility created by the World Cup as the government lays out its 3 rd National Development Strategy to help achieve the ambitions of Qatar National Vision 2030,” the statement reads.
Qatar has smoothly navigated the recent global economic and market volatility. The Russian war in Ukraine highlighted risks from geopolitical tensions, including the impact on energy prices, and the role of natural gas in safeguarding energy security, opening up opportunities for Qatar, the statement said and added that “the banking sector turmoil originating from the U.S. has had only a limited and temporary impact on the domestic financial system”.
“Risks to the outlook are broadly balanced. Downside risks stem mainly from an unfavorable global environment, including a sharper-than-expected global growth slowdown, tighter and more volatile global financial conditions, increased commodity price volatility, and further worsening of geopolitical tensions. On the upside, accelerated reform efforts guided by the 3 rd National Development Strategy, to be unveiled in the summer of 2023, could boost productivity and promote economic diversification. Sustained high hydrocarbon prices would further strengthen the outlook,” it added.
Fiscal discipline has been broadly maintained in 2022, with most of the hydrocarbon windfalls saved and overall expenditure largely kept within the budget envelope.
“As a result, fiscal surplus rose to around 10 percent of GDP in 2022, from close to zero in 2021. Central government debt declined by 16 percentage points to around 42 percent of GDP during the same period. The 2023 budget balances continued discipline and sustaining domestic demand, with a broadly unchanged wage bill and cuts in public investment from 2022 outturns. The upcoming medium-term budget, for 2023–25, will be developed following the release of the 3 rd National Development Strategy to balance aspiration for transformation and fiscal discipline,” the IMF said.
“Banks’ reliance on non-resident deposits has progressively fallen by more than one-third (nearly $30 billion) since their peak registered in late-2021. The completion of World Cup-related projects and hydrocarbon windfalls have reduced credit demand from the public sector and provided additional liquidity to banks, reducing their funding needs. The QCB has implemented several macroprudential measures since the Spring of 2022 to discourage banks from relying on non-resident deposits, especially of short tenors,” the statement said.