Qatar looks ahead to its next economic challenges

The state is well-positioned to diversify its economy away from hydrocarbons and alter its tax system to ensure a fairer contribution from the population, but a change of culture may be needed first.

Al Majalla

One of the world's richest countries, Qatar still has some economic challenges. In part, these hinge on cultural changes.

Qatar looks ahead to its next economic challenges

Amer Ziab Al-Tamimi

last update on 20 Jul 2025

The world’s richest country, Qatar is smaller than the US state of Connecticut, yet this 160km peninsula in the Arabian Gulf punches well above its weight in many areas, not least in diplomacy. There are still challenges, however, including in economic diversification and the need for citizen contribution to a fair tax system.

The last century has seen Qatar change enormously. Until the 1920s, its economy relied on pearl diving. In the 1930s and 1940s, crude oil was discovered there, drills were sunk, and exports began. More fields were discovered in the 1960s and 1970s, as was natural gas. Today, oil and gas make up around 97% of Qatar’s exports, worth around $58bn annually.

An Iranian missile attack on the Americans’ Al Udeid Air Base in Qatar recently made headlines, but the damage was telegraphed and minor, and the two countries generally enjoy good political and economic relations, sharing ownership of the world’s largest gas field located on their maritime border.

Qatar has the third largest natural gas reserves in the world (13% of all known reserves), after Russia and Iran. Its main gas trading partners are India, China, Japan, South Korea, the US, and the UAE. Qatar produces 650 million cubic metres of gas daily from its portion of the field, while Iran produces 430 million cubic metres from its.

AFP — Qatar still relies heavily on the export of hydrocarbons, which brings in tens of billions of dollars a year.

Iran and Qatar have established economic agreements across various sectors, including maritime transport and bilateral trade. Politically, Qatar has historically been good at understanding Iran’s positions and disputes, and has used this understanding to mediate in resolving Iran’s conflicts with Gulf countries and other Arab states.

Financial firepower

Ruled by the Al-Thani family for two centuries, Qatar has strengthened its political influence and contributions throughout the Middle East by leveraging its substantial economic capabilities. In 2023, the World Bank estimated Qatar’s GDP at $227.5bn, with an annual per capita income of $77,000 in a population of about three million, only 15% of whom are Qataris (most are expatriates).

In 2023, its exported $129bn of liquefied natural gas (LNG), oil, fertiliser, and iron. Qatari exports primarily go to Japan, South Korea, India, and China. Together, they account for 59.7% of export value. The European Union accounts for another 7.6%, followed by other countries, including Singapore, the UK, and the US. As such, Qatar relies heavily on maritime trade passing through the Strait of Hormuz, making it a Qatari priority to keep the route open and free from tensions.

In 2023, the World Bank estimated Qatar's GDP at $227.5bn, with an annual per capita income of $77,000

An International Monetary Fund (IMF) report published on 11 February 2025 noted that Qatar benefited significantly from hosting the 2022 Football World Cup through substantial infrastructure development, improved transportation networks, and enhanced tourism services. The IMF estimated economic growth at 2% for 2025, with public investments potentially raising this to 4% over the medium-term.

Needing to diversify

Increased LNG production and export will add to the growth rate in the coming years, but there is also a push to diversify the Qatari economy by improving the contribution of sectors such as tourism, education, and healthcare services. Yet the Qatari economy is still heavily reliant on the hydrocarbon economy and shifts in energy economics, which includes increases in oil and gas production from other countries, and declining demand in consuming nations.

Although moving away from carbons is a challenge for both the government and the private sector in Qatar, there are funds to help. The Qatar Sovereign Fund, managed by the Qatar Investment Authority (QIA), held assets of $526bn at the end of 2024, and can use these to help boost sectors such as tourism, where Qatar faces competition from other Gulf countries, especially the UAE, which has a similar climate.

Karim Jaafar/AFP — The minaret of Katara Mosque, known as Qatar's Turquoise Mosque, in Doha on July 15, 2025. Qatar welcomes millions of visitors every year.

Official data indicates that Qatar welcomed five million visitors in 2024, up 25% from 2023. The award-winning airport's expansion has significantly enhanced its services, establishing Doha as a major regional transit hub, while flag carrier Qatar Airways is consistently voted one of the world's best airlines.

A small nation with a relatively young population of just over three million, most who live there are foreign expatriates who come to work. As with most rich countries, the fertility rate is relatively low (1.7 children) and life expectancy is relatively high (82.7 years), as are living standards. But Qatar's demographics pose an economic challenge.

Skills and motivation

While many Qatari nationals hold leadership positions in government institutions, organisations, and banks, analysts query the role they play in productive work and service industries, and wonder if they can develop their contributions as skilled labour, adaptable to technological developments and shifts in the labour market? Although Qatar has made progress in education, the task now is to identify suitable qualifications for young Qatari men and women to enhance the features of a knowledge economy, developed with Qatari talent.

The task now is to identify suitable qualifications for young Qatari men and women to enhance the features of a knowledge economy

The private sector will be crucial in employing nationals, enhancing their skills, promoting professionalism, increasing productivity, and encouraging a culture of innovation and development. The well-managed World Cup is an experience that can be built on. The challenge, some find, is in motivating nationals to contribute and achieve, instead of relying on expatriates.

Reuters — Qatar hosted the 2022 Football World Cup, which provided a big boost to the state's infrastructure development.

Some suggest changes, such as by supporting public treasury revenues through a fairer tax system or slashing subsidies. Qatar does not currently collect the full cost of electricity and water services because these services are subsidised. Similarly, healthcare services are available for nominal fees.

Alongside that, government projects are aiming to re-evaluate the rentier or welfare state systems, which is necessary given the current state of oil and gas economies, but implementing these changes may require a shift in culture and transformations in the labour market systems to promote productivity and contribution. Making that happen is the next big Qatari challenge.

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