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Qatar economy rebounds alongside diplomatic activity

13 January 2025

 

Qatar welcomed some 5.1 million visitors in 2024, the highest number on record and representing a 25% year-on-year increase. But the growing waves of holidaymakers have not been the only notable arrivals of late – regional political figures have also been showing up, as Doha resumes its efforts to resolve the Gaza conflict while also seeking to play a role in rebuilding Syria.

The diplomatic activity comes at a time when the broader economy is emerging from its post-World Cup slump. After the football tournament ended in 2022, there was something of a slowdown, as activity in the construction and services sectors eased off.

According to the Washington-based IMF, real GDP growth fell from 4.2% in 2022 to just 1.2% in 2023. In its latest report on the economy, published in early December, the IMF suggested the rebound had started, with GDP growth of about 2% in 2024/25.

Over the medium term, the IMF expects growth to rise to about 4.75%, helped by a significant expansion of LNG production.

Others take a similar view. On 7 January, Dubai-based bank Emirates NBD revised down its 2024 GDP growth forecast for Qatar to 1.7%, from 2% previously. But it said it expects growth to tick up to 2.6% this year and then accelerate to 4.8% in 2026, as more gas exports come online.

While hydrocarbons will continue to be the most important element of the economy for many years, tourism will play an increasingly important role in economic diversification efforts. 

The country now has more than 40,000 hotel rooms – substantially more than the 31,000 permanent rooms in place when the football tournament was on (augmented by 100,000 temporary rooms on cruise ships and in fan villages and rented homes and apartments).

The number of visitors since the tournament has risen substantially: from 2.6 million in 2022, the figure rose to 4.1 million in 2023 and over 5 million last year. Many more travel through Hamad International airport, which handled almost 53 million passengers in 2024, some 15% more than the year before.

Citizens of more than 100 countries are eligible for visa-free entry to Qatar. That open-minded approach also informs the country’s diplomatic activities.

Diplomatic re-engagement

On 28 December, Prime Minister and Foreign Affairs Minister Sheikh Mohammed Bin Abdulrahman Al-Thani met a Hamas delegation led by Khalil Al-Hayya to discuss a potential Gaza ceasefire deal. Doha had shuttered its mediating efforts in early November, saying neither Hamas nor Israel were engaging seriously.

In January, the diplomatic activity stepped up further, as indirect talks mediated by Qatar resumed. David Barnea, the head of Israel’s Mossad intelligence agency, travelled to Doha, as did US President Joe Biden’s Middle East envoy Brett McGurk. Early reports suggest some progress was being made.

“There are extensive negotiations. Mediators and negotiators are talking about every word and every detail. There is a breakthrough when it comes to narrowing old existing gaps, but there is no deal yet,” one unnamed Palestinian official close to the talks told Reuters.

Activity relating to Syria has been even more pronounced. Unlike some other Gulf states, Doha had resisted the urge to normalise relations with Bashar Al-Assad in recent years, even as many observers assumed his regime had survived the revolution and would continue to hold power in Damascus indefinitely.

As other countries reopened their embassies, Qatar’s remained shuttered. That changed nine days after the Assad regime fell, when the Qatari diplomatic presence in Damascus reopened for business on 17 December. Khalifa Abdullah Al-Sharif was appointed as charge d’affaires.

The new Syrian regime led by Hayat Tahrir Al-Sham (HTS) appears warmly disposed towards Doha. Visiting the Qatari capital on 5 January, Syria’s Foreign Affairs Minister Asaad Al-Shaibani described Qatar as “a strategic partner”.

On 23 December, Minister of State at the Ministry of Foreign Affairs Mohammed Bin Abdulaziz Al-Khulaifi had travelled to Damascus, where he met HTS leader Ahmed Al-Sharaa (better known during the revolution by his nom de guerre Abu Mohammad Al-Julani) to discuss bilateral relations.

Among other things, Qatar has been helping to restart operations at Damascus International airport – international flights resumed on 7 January, with the first arrival coming in from Doha (the first departure went to Sharjah). Qatar, along with Turkiye, has also reportedly pledged to supply electricity-generating ships to provide 800MW of power to the country. 

Al-Shaibani’s visit to Doha in early January was part of a wider tour of key Gulf capitals. While in Qatar, he called on Western countries to remove sanctions on his country, saying they “constitute an obstacle to the rapid recovery of the Syrian economy … We renew our demand for the United States of America to lift the sanctions to speed up the recovery and start building the new Syria”.

The following day, the US announced a six-month suspension of sanctions on dealings with the Syrian government. Senior European figures have indicated they could soon take similar steps. Among other things, relaxing sanctions could enable Doha and other Arab governments to help fund salaries for Syrian public sector employees.

The health of Qatar’s public finances means such support is easy to provide. The government has consistently run a budget surplus in recent years, and that is expected to continue. Emir Sheikh Tamim Bin Hamad Al-Thani approved the budget for 2025 in mid-December. It includes spending of QR210bn ($58bn) and revenues of QR197bn, pointing to a deficit of QR13bn.

However, UK-based Oxford Economics has pointed out that the figures were based on conservative oil price assumptions. The consultancy expects Doha to actually run a surplus of QR12bn for this year, down from QR25bn in 2024 but still substantial. “These projections underscore Qatar’s fiscal discipline and sustainable policies,” it said in a 19 December report.

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Dominic Dudley

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