How Qatar’s economic and investment landscape is evolving

Exploring Qatar's robust economic growth, investment strategies and AI advancements amidst global challenges.

In brief

• Qatar's GDP grew by 23.2% from 2019 to 2023, surpassing global economic growth, with strategic initiatives and a major sporting event in 2022 driving prosperity.
• Investors maintain a positive outlook for 2024, with a focus on growth opportunities and capital accessibility.
• Significant investments in AI and technology reflect a strong belief in AI's positive impact on society and the job market.

The past few years have presented many challenges to the global economy, from the COVID-19 pandemic, supply chain disruptions, escalations in geopolitical tensions, turbulent energy prices, high interest and inflation rates, among many others. Qatar has managed to navigate these challenges and achieve strong economic growth. Qatar has managed such remarkable success by focusing on its strategic goals and ambitions, most notably the hosting of a hugely celebrated and successful global sporting event in 2022. The event itself was one of the main catalysts of growth in the past decade, culminating in an annual GDP growth of around 31.5% in 2022. However, an adjustment period after the event was expected, with the GDP decreasing by 8.1% in 2023, following the previous years’ record high. Remarkably though, the country managed to retain most of the growth in economic output post the event, with the GDP in 2023 standing at around a 20.9% higher level than what was achieved in 2021. This sustained growth in economic output levels is due to the country’s continued efforts to promote economic growth and improve its business environment.

Through our Qatar Investment Outlook Pulse series, which began in 2022, we have continued to engage with executive decision-makers from some of Qatar's leading businesses. The discussions held between Q4 2023 and Q1 2024 have been instrumental in shaping our understanding of the investment and economic sentiments that will influence Qatar's economic landscape in the coming year. The report “Qatar Investment Outlook Pulse” encapsulates the collective outlook and strategic perspectives that are pivotal for anyone looking to navigate the dynamic economic environment of Qatar.

Investment climate and strategies: insights and expectations in Qatar

All interviewees reported profitable investments in the past year and 75% expect higher returns in 2024. Most seek a 10% to 15% hurdle rate for new projects, with a minority aiming for 15% to 20%. Access to capital in Qatar is generally good, though 40% face challenges due to high interest rates, conservative banking, and foreign currency restrictions.

With regards to the capital allocation strategy of investors, responses were mixed. Around 46% of interviewees indicated that their main priority for 2024 is to deleverage and reduce debts. Around 38% of interviewees indicated that they are actively seeking growth opportunities through organic investment projects or acquisitions. The remaining 15% indicated that they seek to maintain cash for unexpected challenges or future opportunities. 

With regards to changes to the investment landscape that would further promote Qatar as an investment destination, 81% of interviewees have the opinion that improvements to the transparency or efficiency in the implementation of regulations are needed to improve the standing of Qatar as an investment destination. Some of the discussions refers to the ambiguity regarding the anticipated introduction of the value-added tax (VAT) tax in the country as an example. 

Additionally, 50% of interviewees indicated that improvements to the procedures of the justice system would likely further promote Qatar as an investment destination, with some discussions referring to lengthy processes relating to resolving business disputes.

AI advancements and investment perspectives in Qatar

The past few years saw pivotal changes in the development of AI, mainly marked by significant breakthroughs and the excitement around the shift toward real-world implementation and applications. The excitement in Qatar about the subject is clear from Qatar Airways’ introduction of the world’s first robotic flight attendant in a show in Dubai. Other significant breakthroughs include the recent announcement by the Qatar Investment Authority (QIA) about a venture capital fund of funds (FoF) that would invest US$1b with the aim of supporting and investing in innovative local and regional startups in the tech sector, and the adoption of a national AI strategy that is aligned with QNV 2030. With these factors in mind, the interviewees expect that future developments in AI would positively impact the global community across all spectrums of society.

Around 60% of interviewees expect that the anticipated disruptions from AI on the job market would be transient, and that the technology would not replace a significant portion of the human workforce. As per them, it would create new opportunities to replace the ones that get downsized or eliminated. Around 72% of interviewees have either already invested in AI or associated technologies, or are planning to invest in the year ahead.

Conclusion

Qatar's strategic focus and adaptability have fueled its impressive economic growth, outperforming the global average despite recent challenges. Investors remain confident, eyeing higher returns and growth opportunities, while also advocating for regulatory enhancements to further solidify Qatar's investment appeal. The nation's proactive embrace of AI and technology positions it at the forefront of innovation, promising a transformative impact on society and the economy. With a balanced approach to investment and a commitment to technological advancement, Qatar is poised to continue its trajectory of prosperity and influence on the global stage.