Promising outlook for Qatar and the Gulf

Fahad Badar reviews IMF assessments of Qatar and the Gulf, covering LNG, diversification, banking strength and challenges to sustained growth.

While the past few years have featured a raised profile and growing economy for Qatar, the nature of the past growth could have aggravated underlying weaknesses. The strength in global demand for liquefied natural gas (LNG) has boosted export earnings, vindicating the investment in the sector, while hosting the FIFA World Cup in 2022 boosted the nation’s profile and its soft power.

But the economy could have come to a hard landing after the tournament, and there is always the risk of being overly reliant on exports from a single product – in this case LNG. So the latest visit by experts from the International Monetary Fund (IMF), in September, represented a timely opportunity to benefit from expert, external assessment of economic progress.

The report is strikingly positive. In addition to strong macroeconomic indicators – low debt, twin surpluses, high foreign reserves, low inflation – the IMF team reports that diversification, stability and growth have all been well supported by policy. 

Strengths of policy-making include the coherence and long-term nature of strategic planning, and consistency in implementation. The IMF team drew attention to four key pillars of the Third National Development strategy (NDS3), which sets objectives for 2030: 

  • Economic and business diversification; 
  • Competitiveness; 
  • Productivity, 
  • Climate sustainability.

Economic growth has been slightly higher, in percentage terms, in non-hydrocarbon sectors, which is promising in terms of the goal of diversification. Economic growth of 2.4% was registered for 2024, with non-hydrocarbon growth at 3.4% - projected to reach more than 4% for 2025. The IMF team drew attention to development of the tourism sector – visitor arrivals were up nearly 30% and hotel occupancy was high.

Strong export earnings from hydrocarbons have been used to strengthen fiscal and external balances, and for investment. The major expansion of LNG extraction in the North Field is set to underpin economic growth for some years to come. Qatar has signed long-term contracts for supply of LNG, with contractual terms that stipulate a ceiling and a floor to prices, to mitigate the effect of price volatility. 

Qatari banks are well capitalized, the IMF reported; the rate of non-performing loans is low, at 3.6%, and has fallen slightly. The team noted a reliance on external funding by Qatari banks as a vulnerability but partially mitigated by a shift in funding structures towards longer-term and stable domestic sources. Also of significance, not directly mentioned in the report, is increased reserves held by the Qatar Central Bank including holdings of gold, which have constituted a profitable investment.

Non-hydrocarbon growth, diversification and foreign direct investment would be helped by sustainable population growth. The report commends the ‘significant progress’ made in attracting talented people, and enhancing their rights and mobility. Policies are being developed to promote ‘Qatarization’ to enhance the participation of national talent in various economic sectors

For the other nations of the GCC, there is a similarly healthy economic situation. Shortly after the Qatar visit, in early October, the IMF’s Managing Director Kristalina Georgieva addressed a meeting of ministers of the GCC. She acknowledged that the economies had the advantage of being oil and gas exporters, which are strong earners and exempted from tariffs, but she identified additional strengths, including fiscal responsibility and progress on economic diversification. She praised the momentum that policymakers had maintained – for example in resisting pro-cyclical, stop-start public expenditure programs. 

Growth prospects globally remain subdued, and affected by obstacles, but the outlook for the GCC is better. The IMF projects growth in the region of between 3% and 3.5% for 2025, accelerating to 4% by 2026, higher than the global average. Non-hydrocarbon growth is projected to remain strong over the medium term, according to the Fund, and five of the GCC nations are among the 30 most competitive economies.

There are potential risks, such as a lower oil price, which could negatively affect investment levels as well as export earnings. If global trade tensions were to increase amid other features of geopolitical uncertainty, higher oil production could lead to a significant fall in the price, to as low as $40 per barrel.

Her key messages for ministers included encouraging partnerships with tech firms by building data centers and exploiting the opportunities of AI. She also said that economies would benefit from a deepening of local financial markets, in particular by developing bond markets. Harmonization of financial regulations across the GCC nations would assist this development.

Taken together, these two assessments from the IMF demonstrate that there is far more to Gulf wealth and economic prospects than export earnings from oil and gas. 


First published in Gulf Times on 13 October 2025.

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