On January 27, 2025, the Executive Board of the International Monetary Fund (IMF) concluded its Article IV consultation with Qatar. The consultation revealed that growth normalization after the 2022 FIFA World Cup is ongoing, with recent signs of strengthening activities. Real GDP growth is projected to gradually improve to 2 percent in 2024-25, supported by public investment and spillovers from the ongoing LNG expansion project.
The medium-term growth outlook for Qatar is expected to accelerate to an average of 4¾ percent. This acceleration will be driven by significant LNG production expansion and initial gains from reforms guided by the Third National Development Strategy (NDS3). Headline inflation is anticipated to ease to 1 percent in 2024 and stabilize around 2 percent over the medium term.
In 2023, lower hydrocarbon prices led to a narrowing of both current account and fiscal surpluses to 17 percent and 5½ percent of GDP, respectively. These surpluses moderated further in 2024. As Qatar's LNG production expands significantly over the medium term, both accounts are expected to remain in surplus but decline as a share of GDP due to projected falling hydrocarbon prices.
Qatar's banking sector remains well-capitalized, liquid, and profitable. The capital adequacy ratio was close to 20 percent, while return on equity stood at approximately 14½ percent in the third quarter of 2024. Measures implemented by QCB have reduced banks' net short-term foreign liabilities significantly. Non-resident deposits have declined markedly as banks diversified their sources of foreign funding.
Qatar has embarked on implementing NDS3 aimed at building a more diversified economy driven by knowledge and private sector initiatives. Reform momentum has increased significantly under NDS3, focusing on attracting high-skilled expatriate workers and fostering innovation among other goals.
Risks to Qatar's economic outlook are balanced with potential downside risks arising from global headwinds such as slower-than-expected global growth or geopolitical tensions affecting tourism and capital inflows. Domestic risks include potential weaknesses in real estate despite strong tourism mitigating some risks.
Executive Directors at IMF agreed with staff appraisals welcoming Qatar’s resilience against external shocks and favorable medium-term outlook due largely due significant increases in LNG production alongside reforms under NDS3 framework: "Directors commended authorities’ commitment continued fiscal prudence called accelerating fiscal reforms."
The next Article IV consultation between IMF and Qatar is scheduled within a standard twelve-month cycle.