Inflation in Qatar to rise by 2023

The Qatar Planning and Statistics Authority has published a new inflation forecast for the country. It is expected that by 2023 its level will be between 2 and 3.5%. 

The increase in inflationary pressure is due not only to the increase in prices for basic goods on world markets in connection with the pandemic, but also to the consequences of the country's financial and monetary policy. Due to the openness of Qatar to foreign investors and the high level of their investments in the national economy, the state is highly dependent on external factors. 

The increase in the value of Qatari exports is directly affected by changes in the prices of imported goods and services; changes in transportation, delivery and unloading costs; as well as changes in the exchange rate of the Qatari rial against the currencies of the country's trading partners. However, due to the tie-in of the national currency to a stable US dollar, the damage from import inflation in the event of sharp changes can be mitigated. 

Given the fact that Qatar imports more than 90% of its needed goods from international markets, one of the most important factors affecting price indices is international energy prices. There is a correlation between the Qatar consumer price index and world energy price indices. Given this, the rate of consumer price inflation in Qatar has increased significantly over the past twelve months, which have become a crisis for the global energy market. From November 2020 to November 2021, the figures increased from negative 2.95% to positive 6.1%. 

Meanwhile, one of the most profitable sectors for Qatar will remain the transport, tourism, and hotel business sectors. After the restrictions were lifted due to the pandemic, these areas began to bring huge income to the state economy and, while maintaining the same pace, will become the “support” sectors for the country.