Blog Post

Qatar entered COVID-19 with a very particular set of circumstances, namely a high specialization in liquefied natural gas exports and very limited interaction with its immediate neighbors due to a diplomatic rift. These factors somewhat buffered the impact of COVID- 19. The fundamentals for a strong recovery are in place through resilient demand for gas as a transition fuel, an extensive set of business environment reforms, and a tourism sector that was gearing up for 2022, not 2020-21.

Recent Developments
Qatar is distinct from other GCC economies in the dominance of natural gas exports, a model in which it has made large investments to bring gas onshore and ex-port it mainly via liquefaction (LNG). As a result, it is the world’s second-largest gas exporter and the largest exporter of LNG. The collapse in crude oil prices at the start of the pandemic reverberated through to LNG markets, especially oil-linked LNG contracts. This persisted for most of 2020 and weakened overall GDP growth

Outlook
Real GDP growth for 2021 is expected to be 3%, with the same rate of growth for both oil and non-oil GDP, driven by domestic and foreign demand as vaccinations roll out and with the end of the diplomatic rift. Strengthening energy prices and final preparations for the FIFA World Cup 2022, as well as expected bumper tourist receipts from what could be the world’s first post-COVID mass audience sporting event, should lead to 4.1% growth in 2022, with non-oil GDP expected to grow 4.9% (and oil GDP remaining at 3%).

The fiscal deficit is expected to narrow to 2.3% in 2021 following recovery in hydrocarbon prices, the potential introduction of VAT in the current year and a general easing of fiscal mitigation as the pandemic unwinds. Like other macroeconomic indicators, the current account in Qatar is largely a function of energy-related commodity prices and export volumes.