Qatar, which is seeking to cement its position in the global liquefied natural gas (LNG) market, is expected to see its public foreign assets reach $500bn by 2025, according to the Institute of International Finance (IIF).
"The current account and fiscal balances will remain in large surpluses, leading to further accumulation of public foreign assets, which could increase to about $500bn, equivalent to 240% of GDP (gross domestic product), by end-2025," the Washington-based economic think-tank said in its latest report.
Highlighting that Qatar is seeking to cement its position as the world’s second-largest gas exporter and the largest exporter of LNG, given its massive reserves and surging global demand; it said massive investment in the natural gas sector is underway to expand LNG production.
QatarEnergy had early this year announced that it is proceeding with a new LNG expansion project, the "North Field West” project, to further raise the country's LNG production capacity to 142mn tonnes per year before the end of this decade, representing an increase of almost 85% from current production levels.
Qatar’s long-term LNG contracts are linked to crude oil prices and such an expansion in gas production would lower the fiscal and external breakeven oil prices from around $45 per barrel in 2023 to $33 by 2025, IIF said.
IIF also said Qatar’s non-hydrocarbon real GDP growth moderated after hosting the 2022 FIFA World Cup. Substantial public infrastructure investment on ports, roads, metro, and airports since 2011 set the stage for economic diversification, the report said.
Nonetheless, challenges remain to move to a sustained higher non-hydrocarbon growth driven by the private sector as envisaged in the Qatar’s National Vision 2030, it said.
"We expect non-hydrocarbon growth to remain below 1% due to weaker private consumption and investment," it said.
According to IIF, the GCC countries have navigated the global landscape and the conflict in the Middle East "quite well".
However, the large current account and fiscal surpluses that helped cushion past shocks have started to narrow, amid falling oil revenues and large investment-related imports needed to diversify their economies away from oil.
"In our baseline scenario, which assumes no disruption of oil exports from the region, average oil prices could decline from $80 per barrel in 2024 to $70 in 2025," it said.
Considerable progress has been made in improving the business climate, particularly in Saudi Arabia and the UAE — which, combined, account for 75% of total GCC output. Progress has been made in diversifying GCC economies away from oil, as signalled by the steady decline in the share of the hydrocarbon sector’s contribution to real GDP from 36% in 2015 to 30% in 2024.
"Digitalisation and AI (artificial intelligence) continue to play a key role in the economic diversification strategy," IIF said.
Qatar, which is seeking to cement its position in the global liquefied natural gas (LNG) market, is expected to see its public foreign assets reach $500bn by 2025, according to the Institute of International Finance.
