Second Quarter | 2024

Qatar is on the verge of generating immense new wealth. Its third North Field expansion might lift LNG production from 77 to 142 million tonnes per annum by 2030, an increase of close to 85%, and real GDP could grow by half. The question for Qatar is what to do with this wealth: how much should be invested at home versus abroad? Many think Qatar should diversify into a broader domestic economy, on the model of the UAE or Saudi. Qatar's circumstances, however, are genuinely different. Its infrastructure is already high quality and underutilised, and the obvious sectors that could absorb capital domestically are either capacity-constrained or unlikely to generate competitive returns. The decision is also not purely economic. Qatar's leaders are likely weighing national identity, the cultural impact of further expatriate growth, and meaningful employment for young Qataris in a country where a significant majority of the local labour force already works in the public sector. Our view is that Qatar will continue to deploy most of its capital internationally, with domestic allocation largely focused on supporting Qatari employment. These are good problems to have.