The International Monetary Fund (IMF) revealed that Qatar’s economy has returned to a normal state following the country’s strong fiscal performance in 2022, which was largely driven by the FIFA World Cup.
The IMF’s consultation report, released on November 21, indicates that Qatar’s economic prospects in the medium term appear positive, with an estimated output growth rate of approximately 1.75% per annum during 2023-2025.
The report further states that the non-hydrocarbon sector is expected to grow at a rate of 2.75%, driven by domestic demand, which will contribute to the country’s medium-term expansion.
The IMF report said, “Qatar’s economic growth has normalised in 2023 following the World Cup-driven boom. Medium-term growth is set to increase to around 5 per cent per annum supported by LNG production expansion.”
According to a recent report, Qatar’s efforts to achieve its National Vision 2030 – which aims to ensure sustainable development by the end of the decade – are expected to yield positive results.
The report also indicates that inflation in Qatar is expected to moderate to 2% this year, while the fiscal and current accounts are projected to remain in surpluses in the medium term.
Moreover, the Planning and Statistics Authority of Qatar revealed that inflation rose 2.52% in October on an annual basis, largely due to increased expenses related to communication, recreation, and food.
However, inflation has since moderated following the tightening of monetary policy in line with the US Federal Reserve, which is consistent with the country’s currency peg to the US dollar.
“Broad fiscal discipline amid sizable hydrocarbon windfalls in 2022–23 has strengthened the fiscal position significantly and is commendable. Continued fiscal prudence is expected under the upcoming 2024 budget,” IMF noted.
The International Monetary Fund has stated that the Qatar Central Bank has effectively maintained both price and financial stability.
Additionally, the banks in Qatar are in good shape, although the non-performing loan ratio has increased due to pandemic-related restructured loans turning non-performing.
“The QCB has refined macroprudential measures to reduce further risks associated with banks’ external asset-liability mismatches, especially those of short maturities, which is welcome,” IMF added.
The agency has emphasised the importance of continued diligence in further strengthening the banking sector, especially in an environment of “higher-for-longer” interest rates.