The 2022 World Cup is expected to strengthen the economic momentum in
Qatar, which has the strongest public finances in the Gulf region,
according to Oxford Economics.
“Qatar is in the final stages of preparing the 2021 budget, which the authorities pledged would be based on a $40 per barrel oil price, suggesting limited fiscal headroom,” Oxford Economics said in a research note on the Middle East and North African economy.
Nevertheless, public spending is likely to increase with more traditional fiscal support as Qatar ramps up its preparation for the FIFA World Cup football in 2022, it said.
Oxford Economics highlighted that Qatar government’s finances are in “good health” and it has the smallest budget deficit in the Gulf Co-operation Council (GCC) and has tapped the market by issuing a $10bn bond.
The research note said Qatar is also encouraging foreign participation in the economy to stimulate the recovery.
The recently-approved property ownership law should give it a competitive advantage over GCC peers. Non-Qataris will now be able to secure residency for themselves and their families if they purchase residential or commercial units in malls worth $200,000 or more in 25 designated areas.
An investment of $1mn will come with a permanent residency. This scheme comes on the heels of more flexible laws regulating employment and foreign investment.
“The new incentives for expats seem to already be bearing fruit, with signs of stabilisation in house prices in Qatar, which should be supported by other incentives,” Oxford Economics said.
Otherwise in the GCC region, it said, the recovery from the Covid-19 crisis underlines the importance of government policy in maintaining growth momentum in 2021 and laying the foundations for sustained recovery and further diversification of the economy.
The support provided by the GCC governments during the Covid-19 crisis has been more limited than that seen in the US and much of Europe and Asia, especially when factoring in fiscal consolidation that has offset some of the Covid-19 directed support, according to the research note.
However, given the financial resources of several GCC economies and the ease with which they have been able to raise funds on sovereign debt markets, it also reflects a policy choice by governments, it said.
“The expected economic scarring in the GCC is a combination of dependence on oil, the role of travel/tourism in the economy, the expat exodus and modest fiscal support to date,” the research note added.
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