Qatar Economic Outlook
The economy expanded 8.0% year on year in Q4, a multi-year high. The reading was spearheaded by the non-energy sector, with the FIFA World Cup spurring the transport, retail and hospitality industries. The energy sector also recorded robust growth. In contrast, the public sector performed sluggishly, likely linked to school closures and reduced government office hours during the competition. Turning to this year, available data is positive. Tourist arrivals surged in Q1, and the private-sector PMI rose strongly from February onward to a nine-month high in April. In addition, energy output increased by 14.3% in annual terms in February. On the flipside, the construction sector appears to be cooling amid the end of the World Cup construction boom and higher interest rates, with building permits declining year on year in Q1.
Inflation fell to 4.0% in March from 4.4% in February. The Central Bank hiked its policy rates by 25 basis points in May, in line with the Fed, with the lending rate rising to 6.00%. In 2023, our panelists see inflation moderating from last year as borrowing costs rise, the World-Cup-related demand surge ends and commodity prices recede.