The Qatari economy is one of the most solid and less volatile in the Gulf, but it is one of the least diversified as well. The gas rent, which is based on long-term export contracts of liquefied natural gas provides large revenues and is a buffer against macroeconomic shocks (low oil prices during 2015-20, regional tensions in 2017 and the pandemic in 2020).
In the short term, the LNG demand is high, notably in Europe, and prices are high. The World Cup should support economic activity at the end of 2022. Inflation is moderate thanks to government interventions.
In the medium term, economic prospects are very favorable as the production and exports of LNG should rise by around 60%. It should feed the sovereign wealth fund, which is currently equivalent to twice the GDP.
In the long term, the outlook is more uncertain given the consequences of climate change and the need to decarbonize economic activities. However, one advantage for Qatar is that natural gas is considered as a transition fuel, between an energy mix dominated by hydrocarbon and another by renewables. The Qatar policy is to increase gas production and to reduce carbon emissions notably thanks carbon capture and storage technologies. The efficiency of this solution at a large scale has to be proved and the dependency on hydrocarbon will remain very high in the medium and long term.
