After very strong growth in 2022 boosted by the World Cup, Qatar's economy is expected to normalise in the near term while the outlook remains relatively favourable, stated senior International Monetary Fund (IMF) officials after their recent visit to the Gulf state.
Real GDP growth is expected at 2–2½ percent in 2023–24 on robust domestic demand and the ongoing LNG expansion, with inflation moderating gradually to around 3%, they said.
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, they added.
The IMF team, led by Ran Bi, recently visited Doha to gather facts on recent economic and financial sector developments, and the authorities’ policy actions and plans. At the end of the visit, she issued the following statement:
"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 pandemic well, providing a safe environment for the first major global sport event since the pandemic," she stated in th report.
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.
“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 banking sector turmoil originating from the US has had only a limited and temporary impact on the domestic financial system," stated Bi in the report.
According to her, 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," she stated.
On the upside, IMF team said it accelerated reform efforts guided by the third National Development Strategy, will be unveiled in the summer of 2023, and could boost productivity and promote economic diversification.
Sustained high hydrocarbon prices would further strengthen the outlook.
"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," stated Bi.
"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," she noted.
"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," she added.-TradeArabia News Service