meed-logo

line1 line2 line3
SIGN IN / REGISTER

Qatar’s return to economic normality

8 January 2024

 

Diplomacy, not economics, was the flavour of the fourth quarter for Qatar, which has become active again in the conflict resolution arena in recent months, mediating in disputes as far apart as Gaza and Venezuela.

Qatar’s efforts in November to secure a truce in the war between Israel and Hamas secured particularly favourable headlines for Prime Minister and Foreign Affairs Minister Sheikh Mohammed bin Abdulrahman bin Jassim al-Thani and Minister of State Mohammed bin Abdulaziz al-Khulaifi.

Regretfully, the humanitarian truce proved short-lived, and further efforts by Qatar, Egypt and others to forge a broader ceasefire have yet to succeed – though Doha has had successes elsewhere with its mediation efforts in recent months.

Equally important in terms of cementing Doha’s ties with Washington was Qatar’s role in securing the release of US prisoners in Venezuela on 20 December. Qatar’s involvement led to 10 American inmates being allowed to go home, in return for one Venezuelan. Al-Khulaifi said of the Venezuelan deal that it was part of a broader mediation effort to reduce tensions between the two countries.

It was certainly appreciated by Washington, with US ambassador to Doha, Timmy Davis, saying in response: “Once again, Qatar has proven itself an indispensable ally to the United States.”

The positive US sentiment towards Qatar has also been reflected in the new year by a deal between the two countries for the renewal of the US military presence at the expansive Al-Udeid Air Base for another 10 years.

More broadly, Qatar’s recently renewed wave of diplomacy efforts harks back to previous initiatives by Qatar to promote itself as a leading global mediator. From 2008-16, it worked on reducing tensions and forging peace agreements in about 10 regional and international conflicts.

These diplomatic efforts took something of a back seat as the country built itself up for the 2022 football World Cup, but it now appears that the government’s appetite for a role as an instrument of soft power has returned.

Economic heading

At the same time, it remains a pressing concern for Doha to develop a replacement anchoring economic initiative to follow in the wake of its World Cup boom. Such direction is currently lacking, and that was palpably evident when details of the state’s budget for 2024 were issued on 21 December.

Outside of the energy sector, there are only a handful of strategic projects that are continuing, such as a national cancer hospital – and nothing on the scale of the stadium and infrastructure build-out for the football tournament, which sustained the country’s non-hydrocarbons economic growth for a decade.

There are only a handful of strategic projects that are continuing – and nothing on the scale of the stadium and infrastructure build-out for the football tournament

Several more large events are scheduled to take place in the coming years, including the 2030 Asian Games, but none are likely to rival the World Cup in terms of spending or impact.

Overall, expenditure is set to reach QR200.9bn ($55.2bn) in 2024, just 1 per cent higher than the year before. Public sector salaries and wages will account for QR64bn of that total, up 2.4 per cent year-on-year. However, major capital expenditure is down 8.3 per cent.

Based on the highly conservative estimate of an average oil price of $60 a barrel in 2024, compared to $65 a barrel in 2023, Qatar’s revenues are set to decrease by 14.5 per cent to QR159bn this year. This reduction will be partly offset by an expected 2.4 per cent rise in non-oil revenues to QR43bn.

In a press conference on 21 December, Finance Minister Ali bin Ahmed al-Kuwari said that if spending remains at the projected level, the budget will produce a surplus of QR1.1bn, compared to the 2023 budget surplus estimate of QR29bn. However, Qatar also plans to pay off QR7.3bn of debt during the year, meaning the exchequer is projected to realise a deficit of QR6.2bn.

James Swanston, Middle East and North Africa economist at London-based Capital Economics, said the spending plans could yet be expanded. “Qatar’s 2024 state budget showed a slight fiscal loosening … and, if anything, officials may raise spending even further,” he said.

There is plenty of room for manoeuvre given the country’s ample gas reserves and low debts. Qatar’s public debt shrank from 58.4 per cent of GDP in 2021 to 42.5 per cent in 2022 and is expected to continue to fall to 37.4 per cent by the end of this year.

The Washington-based IMF describes the trajectory of the post-World Cup economy as one of “normalisation”. In a statement issued on 21 November following a visit to Doha, IMF mission chief Ran Bi said: “After very strong performance in 2022, economic growth has been normalising, while the medium-term outlook remains favourable.”

The IMF expects annual output to expand by about 1.75 per cent in the period 2023-25, with the non-hydrocarbons sector growing at 2.75 per cent a year. The IMF’s forecast in October was based on a more optimistic oil price of $79.9 a barrel, however.

Energy expansion

In the absence of another national project of note, Qatar has been doubling down on its investments in the expansion and development of its upstream gas infrastructure.

In May, QatarEnergy awarded the $10bn contract for the development of two new liquefied natural gas (LNG) trains at North Field South to the joint venture of France’s Technip Energies and Greece’s Consolidated Contractors Company. This built on a similarly significant $13bn contract awarded in 2021 to Japan’s Chiyoda and Technip Energies to build four LNG trains as part of the North Field expansion project.

Doha also struck a series of long-term supply deals in 2023 for the output from the expanded North Field, including three 27-year contracts signed in October alone, covering the supply of 3.5 million tonnes a year (t/y) of LNG to both TotalEnergies and Shell, and 1 million t/y to Italian major Eni. The following month, Doha signed a deal to supply a further 3 million t/y over 27 years to China Petrochemical Corporation (Sinopec).

QatarEnergy chief executive and Minister of State for Energy Affairs, Saad al-Kaabi, said in mid-December that more deals were imminent. Meanwhile, on 28 December, QatarEnergy announced a five-year crude oil supply deal with a Singapore-based subsidiary of Shell, covering up to 18 million barrels a year from January 2024. Al-Kaabi said it was his company’s first-ever five-year crude sales agreement.

There remains a ready market for the country’s natural gas, not least as the world’s energy transition fuel of choice, as a halfway step away from more polluting oil and coal. Doha nevertheless knows that it needs to find more non-hydrocarbons revenue sources. In the IMF’s November statement, Bi said the country’s plans include “accelerating revenue diversification through further mobilisation of non-hydrocarbons tax revenues”, but exactly what this means in practice has yet to be spelt out.

MEED's February 2024 special report on Qatar includes: 

> GOVERNMENT & ECONOMY: Qatar’s return to economic normality
> BANKING: Qatar’s banks adjust to new circumstances
> OIL & GAS: Qatar enters period of oil and gas consolidation
> POWER & WATER: Qatar power and water projects to take off
> CONSTRUCTION: Qatar construction enters reboot mode

https://image.digitalinsightresearch.in/uploads/NewsArticle/11418013/main.gif
Dominic Dudley

Register for MEED's guest program now to access this article.

Click here to register
Exclusive from Meed
Related Articles
  • KBR re-evaluates design for Libya oil project

    10 July 2026

     

    US-headquartered KBR is responsible for re-evaluating the front-end engineering and design (feed) for the project to develop the J6 North Gialo field in Libya, according to industry sources.

    In June, MEED reported that Libya’s Waha Oil Company (WOC), a subsidiary of the state-owned National Oil Corporation (NOC), had launched a review into the tender process for the J6 North Gialo oil field development project, and that this would include re-evaluating the feed work.

    The Waha concessions are held by a consortium of Libya’s NOC, which holds 59.16%; TotalEnergies, holding 20.42%; and US-based ConocoPhillips, with 20.42%.

    They are operated by WOC, which is 100% owned by NOC.

    KBR has previously provided engineering services for major national projects in Libya, such as the Great Man-Made River project, which is widely recognised as the largest irrigation project in the world.

    In March, KBR was awarded a contract by Zallaf Exploration, Production & Refining of Oil & Gas Company to provide project management and technical services for the South Refinery project in Libya’s southern city of Ubari.

    Under the terms of the contract, KBR will provide contract management, project management and supporting technical services throughout the engineering, procurement and construction (EPC) phases of the project.

    The EPC work is expected to be executed over a 50-month period.

    In its statement, KBR said that the project is aligned with its “long-standing commitment to advancing vital oil and gas infrastructure in Libya”.

    In March, MEED reported that South Korea’s Daewoo had pulled out of the tender process for Libya’s J6 North Gialo oil field development project.

    Daewoo had formed a partnership with Egypt’s Petrojet to participate in the tender process.

    The only other company to submit a bid for the project was UK-based Petrofac, which filed for administration in October last year.

    In January, TotalEnergies signed an agreement extending the Waha concessions agreement up to 31 December 2050.

    This agreement set new fiscal terms, allowing an increase in the production of these concessions that were, at the time, producing about 370,000 barrels of oil equivalent a day (boe/d).

    In January, TotalEnergies said that the deal paved the way for “a new phase of investments, including the development of the North Gialo field, which is expected to add 100,000 boe/d of production”.

    The J6 North Gialo project is the first of three field development projects that WOC has prioritised.

    The other two are known as NC98 and Gialo 3.

    Together, the three projects are expected to double Waha’s production from about 300,000 barrels a day (b/d) of oil to 600,000 b/d.

    The Waha concession covers 13 million acres.

    READ THE JULY 2026 MEED BUSINESS REVIEW – click here to view PDF

    Stress test for Gulf aviation; Mixed performance as country outlooks diverge in the Levant; GCC tourism sector pivots from crisis to recovery mode.

    Distributed to senior decision-makers in the region and around the world, the July 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/17621475/main.jpg
    Wil Crisp
  • Qiddiya to tender high-speed rail in September

    10 July 2026

     

    Saudi Arabia’s Royal Commission for Riyadh City, in collaboration with Qiddiya Investment Company and the National Centre for Privatisation & PPP, are expected to float the tender in September for the Qiddiya high-speed rail project in Riyadh.

    MEED understands that the clarification process is ongoing for the engineering, procurement, construction and financing (EPCF), as well as the public-private partnership (PPP) packages.

    The Qiddiya high-speed rail project, also known as Q-Express, will cover 84 kilometres, connecting King Salman International airport and King Abdullah Financial District with Qiddiya City.

    In April, MEED exclusively reported that the clients had received prequalification statements from firms for the EPCF package of the project.

    MEED also reported in May that firms were forming joint ventures for the PPP package of the project.

    The line will operate at speeds of up to 250 kilometres an hour, reaching Qiddiya in 30 minutes.

    There are five stations planned: Qiddiya Grand Central Station, Qiddiya Uptown Station, King Abdullah Financial District, Terminal 6 King Salman International airport (KSIA) and Iconic Terminal at KSIA.

    READ THE JULY 2026 MEED BUSINESS REVIEW – click here to view PDF

    Stress test for Gulf aviation; Mixed performance as country outlooks diverge in the Levant; GCC tourism sector pivots from crisis to recovery mode.

    Distributed to senior decision-makers in the region and around the world, the July 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/17621301/main.jpg
    Yasir Iqbal
  • Middle East construction cost inflation to hit 5.1% by 2027

    9 July 2026

    Construction cost inflation in the Middle East is forecast to reach 5.1% in 2027, the second-highest of any region worldwide, as global demand for data centres tightens contractor capacity and deepens shortages of skilled labour.

    The projection comes from the Global Construction Market Intelligence report, published by UK programme manager Turner & Townsend. The report draws on data from 112 markets across 44 countries, gathered between 2 March and 20 March 2026.

    Only Africa is expected to see steeper cost escalation, at 7%. Australia and New Zealand follow the Middle East at 4.9%, while the EU records the lowest figure at 2.8%. Globally, construction cost inflation is set to rise from 4.2% in 2025 to 4.5% in 2026 before flattening in 2027.

    The report identifies a two-speed market. Data centres are now the most in-demand construction sector globally, followed by industrial and logistics. More than 70% of the 112 markets surveyed report tightening or overstretched contractor capacity in the data centre sector. By contrast, more than 79% of markets show balanced or spare capacity across hospitality and leisure, residential and commercial development.

    Skills shortage

    Labour availability has displaced material costs as the primary driver of cost escalation. About 71% of markets report labour shortages. Skills deficits are most acute in mechanical, electrical and plumbing (MEP) trades, with 87% of markets reporting MEP shortages. These trades are central to data centre delivery.

    The findings carry weight for the GCC, where sovereign programmes in Saudi Arabia and the UAE are competing for the same contractor pools that artificial intelligence (AI) infrastructure now draws on. Regional governments have announced large data centre commitments alongside gigaprojects, housing and transport schemes, placing further strain on an already stretched supply chain.

    Turner & Townsend says that construction input costs have stabilised over the past year, with supply chain resilience built since the pandemic limiting the impact of recent volatility. Cost drivers are becoming more localised and sector-specific rather than the product of international shocks.

    Energy market exposure introduces a separate risk. The report cites oil prices, higher transport and freight costs, and volatility in petrochemicals inputs as significant challenges. Disruption to shipping routes lengthens lead times and adds supply chain volatility.

    Conflict assumptions

    The baseline scenario assumes a relatively short-lived conflict in the Middle East and a moderate rise in energy commodity prices in 2026. A prolonged or escalating conflict would produce more pronounced effects on inflation, supply chains and construction costs.

    New York remains the world's most expensive construction market at $7,938 a square metre, followed by San Francisco at $7,883 and Geneva at $6,985. London ranks fifth at $6,032.

    North America carries the highest regional labour costs, with an average hourly wage of $79.5, ahead of the EU at $75.6 and Australia and New Zealand at $68.

    Digital adoption remains uneven, though momentum is building. Sixty-six percent of markets report that AI capability now carries more weight in tendering and client discussions than it did 12 months ago.

    READ THE JULY 2026 MEED BUSINESS REVIEW – click here to view PDF

    Stress test for Gulf aviation; Mixed performance as country outlooks diverge in the Levant; GCC tourism sector pivots from crisis to recovery mode.

    Distributed to senior decision-makers in the region and around the world, the July 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/17606750/main.gif
    Colin Foreman
  • Contractor appointed for Dubai’s One B Tower

    9 July 2026

     

    Dubai-based construction firm Naresco Contracting has been awarded a contract to build One B Tower, located on Dubai's Sheikh Zayed Road.

    Local real estate developer Wasl Group awarded the contract.

    It covers a 47-storey high-rise tower offering a mix of one- to four-bedroom residential units.

    The project is also known as One Billion Meals Endowment Tower.

    The enabling works were undertaken by local firm APCC Building Contracting.

    Netherlands-headquartered UN Studio is the project architect.

    Dubai-based firm Studio International Engineering Consultants is the project consultant.

    The project is slated for completion by 2028.

    This is the second major contract to have been awarded by Wasl Group this year for a residential development.

    In January, the firm awarded an estimated $250m deal to build the Avenue Park Towers project in Dubai to South Korean contractor Ssangyong Engineering & Construction.

    The development comprises two mixed-use buildings offering residential and commercial facilities. One of the towers will have 43 floors while the other will have 37.

    The project is slated for completion by 2028.

    Wasl Group's latest contract award in the UAE market is backed by heightened real estate activity in the construction sector, with schemes worth over $323bn in the execution or planning stages, according to UK analytics firm GlobalData.

    The company forecasts that output from the UAE’s residential construction sector will grow by 3% in real terms in 2026-29, supported by infrastructure, energy and utilities developments, as well as residential construction projects.

    READ THE JULY 2026 MEED BUSINESS REVIEW – click here to view PDF

    Stress test for Gulf aviation; Mixed performance as country outlooks diverge in the Levant; GCC tourism sector pivots from crisis to recovery mode.

    Distributed to senior decision-makers in the region and around the world, the July 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/17605135/main.jpg
    Yasir Iqbal
  • Iran and US break peace deal and resume Gulf attacks

    9 July 2026

    Iran and the US have once again traded attacks in the Gulf region, in the worst exchange of fire since the two nations signed an interim peace deal in June.

    US Central Command (CentCom) said on 7 July that it had launched strikes in response to attacks on three oil tankers in the Strait of Hormuz, hitting more than 80 targets including air defence systems, coastal radar and fast boats.

    In retaliatory attacks on 8 July, Iran said it had targeted US military sites in Bahrain and Kuwait.

    Oil prices have spiked following the strikes, with global benchmark Brent crude trading at $77.32 a barrel as of 1pm Gulf Standard Time.

    UK Maritime Trade Operations (UKMTO) said a tanker travelling through the strait had reported a fire after an unknown projectile hit an engine room on 6 July.

    In two separate incidents on 7 July, a tanker reported it had been hit as it exited the strait but was able to proceed to its next port of call, while another tanker reported sustaining minor structural damage after being struck, UKMTO said.

    Qatar and Saudi Arabia have denounced the attacks, each saying a tanker from its country had been hit while transiting in or near the strait, and blaming Iran.

    A spokesperson for Qatar's foreign ministry, Majed Al-Ansari, said it held Iran fully responsible for an apparently targeted attack on a vessel called Al-Rekayyat as it transited near the Strait of Hormuz.

    Saudi Arabia's foreign ministry said Iran had targeted the Saudi tanker Wedyan as it crossed the strait. The owner of the very large crude carrier, the kingdom’s national shipping company Bahri, confirmed the attack on the vessel in a statement on 7 July, adding that “all crew members are safe and accounted for, and the cargo remains secure”.

    “The vessel remains in a seaworthy condition. The company promptly informed all relevant authorities and continues to work closely with them and other maritime stakeholders, while maintaining continuous communication with the vessel's crew and closely monitoring the situation,” Bahri said.

    “Bahri continues to closely monitor developments in the region and has implemented appropriate precautionary measures to support the safety of its people, vessels and operations,” it added.

    Breakdown of peace deal

    Separately, the US also said it had revoked its temporary suspension of sanctions on Iranian oil sales. Iran's speaker Mohammad Bagher Ghalibaf accused the US of breaching their memorandum of understanding (MoU) on this issue, and others, including the attacks in southern Iran and "violating Iranian adjustments in the strait".

    Missiles and drones were launched at "85 key US military facilities", including a US Navy headquarters and an air base in Kuwait, the Islamic Revolutionary Guard Corps (IRGC) said.

    Iranian state media agency Irna also reported the death of an IRGC guard in the US strikes, “after being struck by shrapnel from a projectile".

    Kuwait has responded to the Iranian strikes on its country, lambasting the "repeated attacks".

    Talks on reaching a permanent peace deal have been on hold due to the state funeral in Iran for the late Supreme Leader Ayatollah Ali Khamenei, who was killed on 28 February – the first day of US-Israeli strikes on Iran.

    Early on 7 July, Iran's deputy foreign minister described the US attacks as a violation of the US-Iran MoU signed on 14 June, and warned Tehran would "take decisive measures".

    The US had said there would be consequences for what it called the "wholly unacceptable" attacks on the three tankers.

    CentCom said that in addition to 60 small boats, it had struck Iranian missile launch sites and command centres. It did not give the locations of its targets.

    It said the strikes were "to impose heavy costs for targeting and attacking commercial shipping crewed by innocent individuals in an international waterway".

    Before the strikes, the US Treasury revoked a waiver that had temporarily lifted oil sanctions on Iran and was part of the MoU signed by Washington and Tehran in June.

    Iran's foreign ministry called the move a breach of the MoU and said it proved the "bad faith, inconsistency and unreliability" of the US government.

    It added that Tehran "will take whatever measures it considers necessary to safeguard its national interests and national security".

    READ THE JULY 2026 MEED BUSINESS REVIEW – click here to view PDF

    Stress test for Gulf aviation; Mixed performance as country outlooks diverge in the Levant; GCC tourism sector pivots from crisis to recovery mode.

    Distributed to senior decision-makers in the region and around the world, the July 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/17605530/main5658.jpg
    Indrajit Sen