Qatar’s economy is likely to record only modest growth this year, but analysts predict that revenues generated from a North Field gas expansion will make it among the fastest-growing globally in two years’ time.
Gross domestic product is forecast to surge to nearly 13 percent in 2026, after sluggish growth of only 1.5 percent this year and 2.5 percent in 2025, according to data compiled by Capital Economics, an economic research company in London.
Qatar is the third-largest exporter of natural gas behind the US and Australia. However, the country is going through a period of flat production due to a longstanding moratorium on development of the North Field, the world’s largest natural gas reservoir, which it shares with Iran.
The Gulf state has started expanding its liquefied natural gas (LNG) production capacity from 77 million tonnes per year (mpta) to 142 mpta by the end of 2030 after the embargo was lifted in 2017.
The first phase – set to come fully online by early 2026 – will add 40 percent more to Qatar’s LNG capacity. It is poised to boost the Gulf state’s hydrocarbon GDP by 27 percent in 2026 despite a global drop in oil and gas prices.
Although the surge in output will flood global LNG supply and further weigh on prices, analysts expect the effect of lower prices for Asia spot LNG and Brent crude will be more than offset by the rapid increase in volumes.
As a result, government receipts are forecast to rise by nearly 33 percent from 2025 to 2026, according to James Swanston at Capital Economics.
In 2024, Qatar recorded a negative hydrocarbon GDP of 3 percent, meaning the budget surplus also shrunk, according to the report.
“We expect the budget surplus to improve,” Swanston told AGBI, “allowing fiscal policy to be loosened.”
This spending will allow non-hydrocarbon GDP growth to pick up to 5 percent in 2026.
“The hope will be that as the North Field comes online, it paves the way for investments elsewhere in the private sector to promote activity,” Swanston said.
Johnny Archer, head of research and consulting for Qatar at commercial real estate company Cushman & Wakefield, said: “The expansion of the North Field will undoubtedly be a boost to Qatar’s economy. However, it is yet unclear as to how this will translate directly to sustainable jobs in the oil and gas sector, or indirectly to jobs in other sectors.”
Hydrocarbons make up 80 percent of government revenues, although the country aims to diversify its economy in line with its National Vision 2030 by attracting foreign direct investment, boosting its global competitiveness and building the tourism sector.
Qatar aims to attract 6 million international tourists by the end of the decade, nearly trebling the number from 2019.
The Gulf state is striving to capitalise on the $220 billion it invested in infrastructure in preparation for hosting the 2022 Fifa World Cup. Investment includes the new $16 billion Hamad International Airport, the $36 billion Doha metro and attractions such as the new $5.5 billion Simaisma theme park.
Qatar’s hospitality sector has experienced explosive growth over the past decade, according to a Knight Frank report. However, there was a slowdown in the sector after the World Cup, along with real estate, construction and retail.
Anum Hasan, manager for advisory and research for Saudi Arabia and Qatar at real estate consultancy company ValuStrat, said: “We could witness the start of massive projects. In the near term, these releases will favourably affect the real estate market.”
However, Swanston pointed out that Qatar’s government will want to bolster other areas, potentially increasing its manufacturing, trade and logistics, and financial services sectors.
“The government will still need to diversify its revenues and introduce new taxes, such as VAT or a broader corporation tax, as other Gulf states have implemented, in the long run,” Swanston said.
For a detailed perspective on the property market, visit: Dubai - VPI Residential Capital Values - September 2024
