Sun, June 16, 2024

Qatar’s 2024 Economic Outlook: GDP to Rise by 1.75%

oil prices concept crude oil spilling out of a contianer, qatar

Quick Look:

  • Qatar projected at 1.3% for 2023, rising to 1.75% for 2024 and 2025, with medium-term growth expected at 4.5%.
  • Key drivers include non-hydrocarbon sector growth and public investments, especially in tourism and LNG projects.
  • Launching in January 2024, aims to diversify the economy, boost productivity, and enhance climate sustainability.

Qatar’s economic landscape is moving toward a transformative period marked by strategic investments. It targets growth in non-hydrocarbon sectors and focuses on sustainable development. The market estimated Qatar’s real GDP growth for 2023 at 1.3%. Moreover, economists anticipate the rise to 1.75% for 2024 and 2025. Further, medium-term growth is going to reach an impressive 4.5%.

Qatar’s Non-Hydrocarbon Sector Growth and Public Investments

A significant driver of this economic optimism is the expansion of non-hydrocarbon output. Particularly in 2024, the market is going to see positive growth. Public sector investments are also crucial, with substantial allocations directed towards the tourism sector and the expansion of Liquefied Natural Gas (LNG) production. Notably, the North Field East and North Field South projects enhance Qatar’s LNG output. Besides, future projects like North Field West are promising a 20% increase in production by 2030.

The upcoming National Development Strategy 3 launch in January 2024 marks a pivotal moment for Qatar. This strategy aims to empower the private sector, accelerate economic diversification, boost productivity, enhance competitiveness, and strengthen climate sustainability. These objectives align with Qatar’s vision of fostering a resilient and diversified economy.

LNG Production to Reach 142 Million Tonnes by 2030

In LNG production, Qatar’s strategic projects will significantly boost capacity. By 2027, output will reach 126 million tonnes annually, increasing to 142 million by 2030. These expansions will underpin a spike in GDP as new capacities come online, contributing to robust economic growth and supporting private sector activity.

Inflation will moderate, with an expected rate of 2.5% in 2024, stabilising to 2% in the medium term. Fiscal accounts remain strong, with a fiscal surplus of 5.5% of GDP in 2023 and a non-oil sector GDP growth exceeding 2%. Central government debt is projected to remain below 40% of GDP. However, 2024 will likely see spending cuts as part of fiscal consolidation efforts.

Banking Sector Shows Resilience with 174% Liquidity Coverage

The banking sector shows resilience, with non-performing loans at 3.8% in Q2 2023 and strong liquidity indicators, including a liquidity coverage ratio of 174% and a net stable funding ratio of 140% in Q1 2024. The financial sector strategy is moving towards supporting financial markets. It promotes savings, enhancing borrowing opportunities, developing the insurance sector, fostering fintech, and achieving financial inclusion.

National strategies such as the Qatar National Renewable Energy Strategy, Digital Agenda 2030, National Planning Council and National Statistics Center initiatives are integral to Qatar’s long-term economic vision.

Public Debt of Qatar to Decrease from 37.5% to 30% by 2027

Qatar’s public debt is expected to decrease progressively from 37.5% of GDP in 2024 to 30% by 2027, supported by a fiscal breakeven oil price of $50 per barrel. Reserves are robust, standing at $67.6 billion as of January 2024. Non-resident deposits remain below 20%, and the policy rate is projected to be 5.25% by the end of 2024.

Standard Chartered’s comments on global and regional growth further underscore the positive outlook, highlighting that the LNG expansion will bolster private sector activity in Qatar, leading to a significant spike in GDP and a decrease in public debt.

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