Previous Quarterly Editions
Expropriation Risk: 41 43 42 42 ►Political Violence Risk:35 35 35 35 ►Terrorism Risk:5 5 5 5 ►Exchange Transfer and Trade Sanction Risk: 35 35 35 35 ►Sovereign Default Risk:26 26 26 26 ►
TREND ►
Protest intensity to date* 2022 2023 Low LowUnrest risk in 2024**Cost of living: MediumAnti-austerity: High
*Note: Protest intensity is calculated based on ACLED. **Risk levels are calculated by WTW. Where data are missing no risk level will be displayed. For details of 'anti-austerity' calculations, see the essays in the introduction; for details of 'cost-of-living' calculations, see the previous edition of the Index.
Qatar’s gross debt relative to GDP has declined considerably since 2020, as surging oil and gas revenues have returned budget surpluses in 2022 and year-to-date 2023 and as policymakers in Doha have directed part of the surplus to the payment of public debt. Macroeconomic indicators are positive despite global headwinds; the opening of the first phase of the North Field expansion of liquefied natural gas capacity in 2025 is likely to raise further revenue for Qatar, as will the second phase when it comes online in 2027. Fiscal surpluses and positive indicators look set to continue into 2024.
As Qatar does not suffer from an excess of debt, and the debt ratio is falling rather than increasing, the economic outlook for Doha is favorable, despite a post-2022 FIFA World Cup lull in domestic economic activity that has affected the construction and tourism sectors and seen a 10% decline in the population to 2.7 million. Budget cuts in state and state-owned entities in 2023 indicate a rationalization of spending plans rather than a response to difficult market conditions. New projects, such as an expansion of the metro and other urban projects in and around Doha, are expected to pick up the slack after a decade of focus on World Cup-related infrastructure.
Demographic dynamics and the bifurcated labor market in Qatar insulate Qatari citizens from downturns and ensure that the impact of politically sensitive economic decisions falls first on expatriate residents. Cuts to capital rather than current expenditure similarly provide the government with a buffer from political or economic backlash during periods of lower revenues or budget deficit, as in the aftermath of the oil price collapse in the mid-2010s.
The risk to political stability or government popularity from budget cuts is low, although the fact that cuts are taking place against the backdrop of rising revenues and budget surplus has not gone unnoticed by some in the population.
There are few domestic constraints on government action in Qatar, and the risk of public backlash from economic cutbacks is mitigated by the small size of the citizen population, which facilitates informal backchannels to settle contentious issues, as happened in August 2021 after protests by some Qatari citizens at a new electoral law.
The currency peg to the U.S. dollar has meant that interest rates in Qatar have risen since 2021, which may result in higher borrowing costs and tighter financing conditions, but these are not systemic risks to Qatar’s economic growth.
Given the bedrock hydrocarbon industry’s prevailing model of joint ventures with oil majors, expropriation risks are minimal. Qatar is also touting its new industrial free zones, co-located with its new seaports and airports, as destinations for foreign investment.
The country has increased the number of areas where foreigners can own property. The 2019 foreign investment law should widen the range of sectors in which full ownership is permitted, although details are pending. Additionally, a proposed amendment of that law, if approved, will allow 100% ownership of the capital of Qatari shareholding companies listed on the Qatar Stock Exchange, a move that could spur inflows into listed companies.
Sheik Tamim bin Hamad Al Thani has centralized power in the Emiri Diwan and increased senior royals’ visibility in key government briefs, including the foreign minister, Sheikh Mohammed bin Abdulrahman Al Thani, who was named prime minister (while retaining his foreign policy role) in March 2023.
Qatar’s large expatriate population means that its security sector has traditionally focused on internal security, but the sharp downturn in relations with its large and well-armed neighbors between 2017 and 2020 forced the country to reevaluate its military; Qatar’s armed forces are growing exponentially.
The 2022 football World Cup passed off smoothly, with only a few incidents of minor disorder, mostly relating to traveling fans’ attempts to wear rainbow colors associated with LGBT+advocacy. There were some instances of overcrowding outside stadiums but no significant flashpoints or confrontations with the police or security services.
Qatar has negligible organized crime. Well-paid security personnel and stringent border controls make successful terrorist attacks unlikely. Qatar has expanded its counterterrorism cooperation with the United States.
The country has also made terrorist financing an increased focus of its domestic counterterrorism activities, in response to criticism over gaps in Qatar’s financial system; in 2019, Qatar ratified new anti-money laundering and counterterrorism financing legislation.
Aside from the central bank’s international reserves and foreign currency liquidity, which stood at around US$66 billion in August 2023 — sufficient for well over four months of import cover — Qatar has nearly US$500 billion in foreign assets held by the Qatar Investment Authority.
The country also has the capacity to raise foreign exchange through borrowing. As such, Qatar is very likely to remain committed to, and capable of maintaining, its currency peg to the U.S. dollar. There are currently no known international sanctions against Qatar.
In March 2023, Fitch upgraded Qatar’s credit outlook from “stable” to “positive,” reflecting improvements in the fiscal position arising from higher energy prices as well as Qatar’s robust financial buffers, vast hydrocarbon reserves and high per capita income. Qatar was last downgraded in 2017, following the regional boycott and liquidity risks related to the banking system’s dependence on non-resident deposits, which account for more than a quarter of total deposits.
The banking sector remains overly reliant on external funding (accounting for 44% of the sector’s liabilities at the end of 2022), prompting Fitch, in April 2022, to downgrade seven Qatari banks (including the largest) on concerns that the government’s ability to support the system could be stretched by the scale of non-resident funding.
However, high energy prices have greatly strengthened the government's balance sheet, propelling a budget surplus of US$24.4 billion for 2022 as oil and gas revenues surged after Russia’s full-scale invasion of Ukraine in February that year. A smaller surplus is projected for 2023, but sovereign default risks remain low.
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