Qatar medium-term growth to accelerate to 4.75%, inflation to converge to 2%: IMF

Posted by author February 11, 2025 World

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Qatar’s medium-term growth is expected to strengthen to 4.75% on average, boosted by the significant LNG (liquefied natural gas) production expansion and initial gains from implementing reforms guided by the Third National Development Strategy (NDS3), according to the International Monetary Fund (IMF).

Headline inflation will likely ease to 1% in 2024 and converge to around 2% over the medium term, the Bretton Woods institution said after its Article IV consultation with Qatar.

Growth normalisation after the 2022 FIFA World Cup continued, with signs of strengthening activities more recently, it said, adding real GDP (gross domestic product) growth is projected to improve gradually to 2% in 2024–25 supported by public investment, spillovers from the ongoing LNG expansion project, and strong tourism.

The IMF said with lower hydrocarbon prices, both the current account and fiscal surpluses narrowed in 2023, to 17% of GDP and 5.5% of GDP, respectively.

Highlighting that the twin surpluses moderated further in 2024; it said “over the medium, as Qatar’s LNG production expands massively, both the current and fiscal accounts will likely remain in surpluses, albeit declining as a share of GDP, as hydrocarbon prices are projected to fall.”

Qatar has started to implement the ambitious NDS3 to build a more diversified, knowledge-based and private sector-driven economy.

Guided by NDS3, reform momentum has strengthened significantly to attract and retain high-skilled expatriate workers, foster innovation, promote public-private partnerships, and further improve the business efficiency.

Qatar is well positioned to leverage digitalisation and AI (artificial intelligence) for productivity gains, and the nation’s climate agenda is advancing, according to the report.

Welcoming Qatar’s continued resilience to external shocks and its favourable medium-term outlook, driven by significant increases in LNG production and the reforms under NDS3; the IMF agreed that maintaining prudent macroeconomic policies and accelerating reform efforts would further solidify macroeconomic stability and resilience to shocks while boosting prosperity.

In its executive board assessment, the IMF directors commended Qatar’s continued fiscal prudence and called for accelerating fiscal reforms.

They recommended adopting a medium-term fiscal anchor to help ensure intergenerational equity, and reiterated the need to accelerate revenue diversification, particularly by introducing the value-added tax. They highlighted the importance of improving spending efficiency and composition, particularly by enhancing public investment management.

The IMF supported Qatar’s strategy to build a more diversified, private sector-led and knowledge-based economy as it recommended fostering innovation and business efficiency and enhancing human capital by attracting and retaining more high-skilled expatriate workers, improving Qatari nationals’ employment in the private sector, and further increasing female labour force participation.