Charting a New Course for Qatar’s Economic Diversification After the World Cup
IMF News, July 22, 2024
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- Authors: Ran Bi, Ken Miyajima July
- Published: July 22, 2024
Post‑World Cup economic gains and tourism
- Visitor arrivals in 2023 were nearly twice pre-pandemic levels.
- Tourism this year reached new heights.
- Hosting the World Cup boosted Qatar’s global profile and accelerated economic diversification into non-hydrocarbon sectors.
Role of public infrastructure investment in diversification
- Massive public infrastructure investment program since 2011 built ports, roads, metro, and airports.
- The cost of stadiums represented only about 5 percent of the total infrastructure investment, by some estimates.
- IMF analysis: the public investment program helped drive most of Qatar’s economic diversification over the past decade, contributing on average 5–6 percentage points annually to non-hydrocarbon real GDP growth.
- The newly created infrastructure can be leveraged to generate new jobs, businesses, and opportunities in sectors beyond oil and gas.
Structural and institutional reforms implemented
- Enhanced labor protection for foreign workers, who account for about 95 percent of the labor force.
- First Gulf Cooperation Council country to abolish Kafala, a sponsorship system for foreign workers that limits their mobility.
- Initiatives to improve business efficiency and attract foreign direct investment.
- Advanced digitalization efforts: ranked 16th among 198 countries in the World Bank’s GovTech Maturity Index.
Remaining challenge: transition to private sector‑driven growth
- Key challenge: transitioning from public sector‑led growth to a more diversified, private sector‑driven model, as envisioned by Qatar’s National Vision 2030.
- Qatar’s Third National Development Strategy (2024-30), launched in January 2024, sets strategic priorities aligned with IMF advice.
IMF analysis, simulations, and projected gains from reforms
- Reforms identified as likely to generate significant growth gains:
- Attract more skilled foreign workers.
- Ease access to financing for small and medium enterprises.
- Encourage competition and trade.
- Simulations suggest that a comprehensive package of labor market and business environment reforms could boost annual non-hydrocarbon growth by close to 3 percentage points over the medium term.
- To maximize gains, complementary reforms should be properly sequenced and consistent with the country’s capacity for implementation.
- Continuing progress with digitalization and climate actions can generate new sources of growth and enhance sustainability.
By Ran Bi and Ken Miyajima; July 22, 2024 — IMF News