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Qatar’s 2023 GDP growth to slow after World Cup

Qatar World Cup stadium Kyodo via Reuters Connect
The Swiss commission, which issues recommendations, advised Fifa from making unsubstantiated claims in future
  • Rating agency reaffirms stable outlook for Gulf state
  • GDP growth to slow after 5% World Cup high
  • Country supported by ‘still favourable’ hydrocarbons prices

Qatar’s GDP growth is expected to weaken to 2.3 percent this year from almost 5 percent in 2022 as the positive impact of World Cup-related activity tapers off. 

Ratings agency S&P Global Ratings said the country’s strong economic growth last year was “partly supported” by business momentum in the run-up to and during the Qatar 2022 World Cup. 

Despite the anticipated slowdown this year, growth is expected to pick up from 2025 as capital spending remains strong and hydrocarbon production increases as a result of the North Field Expansion project, S&P said.

The project is planned to boost Qatar’s liquefied natural gas (LNG) production capacity by around 60 percent of current levels by 2027. 

S&P confirmed a stable outlook for Qatar – “reflecting our view that Qatar’s fiscal and external buffers should continue to benefit from the country’s status as one of the world’s largest exporters of LNG over the next two years.” 

The strategic move away from Russian gas by many global economies, especially Europe, is likely to push up demand for additional Qatari gas exports. 

In addition, the country’s strong fiscal and external net asset positions “will remain a core rating strength”, S&P said, while “still-favourable” hydrocarbons prices will help Qatar to maintain an average current account budget surplus of around 20 percent of GDP over the years 2023-2026. 

Qatar Financial Centre’s latest Purchasing Managers’ Index, published last week, supports S&P’s outlook, pointing to the strongest improvement in business conditions in the Gulf state since July 2022.

The headline PMI figure is a composite indicator of non-energy private sector performance, derived from measures of new orders, output, employment, suppliers’ delivery times and stocks of purchases among 450 companies. 

The latest figure, for April, rose to 54.4 from 53.8 in March – staying above the long-term trend of 52.2. The continued uptick was driven predominantly by faster growth in new business, as well as in employment and new stocks.  

However, S&P noted that Qatar’s external liquidity position is weakened by the mainly short-term nature of its domestic banks’ high levels of foreign funding.

S&P would lower its rating for Qatar should the country experience a “significant external shock” that weakens its overall liquidity, for example, worsening trade terms, the agency said. 

In addition, Qatar derives around 40 percent of its GDP and 80 percent of government revenue from hydrocarbons, making its rating “vulnerable to volatility in oil prices”.