The Qatari economy, which is poorly diversified and based on long-term gas export contracts, has not experienced the same volatility as elsewhere in the Gulf during the last five years. In the short term, high oil prices and the forthcoming World Cup will support growth and enable a return to substantial external and budgetary surpluses. Likewise, the reduction in banks’ external liabilities should continue. Inflation will remain relatively moderate thanks to government intervention and the impact of the stronger dollar on import prices. In the medium term, the macroeconomic outlook is very positive as a result of the significant increase in gas revenues. However, it is less certain in the longer term, in the context of the energy transition
The Qatari economy began 2021 under relatively favourable conditions: thought the regional embargo ended, the Covid-19 pandemic is still active. Despite the fall in oil prices in 2020, the fiscal and current account deficits remained limited. Over the medium term, the development of new gas export capacity should further strengthen an already solid macroeconomic position. The main source of vulnerability remains banks’ external indebtedness, which is very high and continues to grow as the economy’s expansion accelerates. However, government support is guaranteed, and the external position of the banks should be restored as a result of the expected slowdown in lending and increase in deposits.
Qatar has the largest non-associated gas field in the world and 13% of world’s natural gas reserves. Qatar is the world’s largest producer and exporter of liquefied natural gas (LNG). Since 2012 and the end of the development of the gas industry, economic growth has relied on non-hydrocarbon sector activity: industry, infrastructure (linked to the 2022 World Cup) and services. The Saudi-Emirati embargo on Qatar has not significantly worsened economic prospects. It has been removed in January 2021 without any significant concession from the Qatari government. New LNG export capacities are due to come on stream by 2025-27, with an expected 60% increase in capacity, providing significant additional hydrocarbon revenues. The main vulnerability is the external position of the banking sector. The net external liabilities are the sector are equivalent to USD124bn or 70% of GDP. The rial (QAR) is pegged to the USD.
Qatar is a member of the Gulf Cooperation Council (GCC). The country withdrew from the Organisation of Petroleum Exporting Countries (OPEC) in 2019.
