Qatar's economy grew by 4.8% in the second quarter of 2015, up from 4% in 2014, driven by strong non-hydrocarbon sector growth of 9.1% despite lower oil prices. Major contributors to non-hydrocarbon growth were financial services, construction, and trade/hotels. Construction grew by 19.7% due to ongoing infrastructure projects worth billions of dollars such as the new metro, airports, and cities. The economy is expected to continue diversifying away from hydrocarbons with real GDP growth projected to accelerate to 6.4% annually from 2016-2017 as new gas production comes online.

1. Page 1 of 2
Economic Commentary
QNB Economics
economics@qnb.com
11 October 2015
Qatar’s growth accelerates despite lower oil prices
Growth in the Qatari economy accelerated in
the second quarter of 2015. Real GDP grew by
4.8% year-on-year, according to the latest data
released by the Ministry of Development
Planning and Statistics (MDPS), compared
with 4.0% in 2014. As has been the case in the
last few years, the non-hydrocarbon sector
was the engine of growth, as hydrocarbon
production broadly stabilised. A string of other
releases show a continuation of growth and
diversification into the third quarter despite
substantially lower oil prices. This manifests
itself in low inflation, strong population
growth and large external surpluses. As a
result, and with new gas production expected
to come online, we expect growth to continue
to accelerate to 6.4% in each of 2016-17.
The non-hydrocarbon sector continues to be
the main driver of economic growth. It
expanded by 9.1% year-on-year in the second
quarter of 2015. The largest contributors to
real non-hydrocarbon growth were financial
services, construction and trade, hotels and
restaurants. Construction activity grew by
19.7% year-on-year reflecting the ongoing
infrastructure projects. These projects include
the new USD40bn Doha metro, real estate
projects such as Musheireb in the centre of
Doha (USD5.5bn) and Lusail to the north
(USD45bn), as well as new roads, highways
and further expansion of the new Hamad
International Airport. Meanwhile, rapid
population growth (mainly due to the influx of
expatriates attracted by the implementation of
large-scale projects) is generating demand for
services. As a result, strong growth was
recorded in financial services (10.0% in Q2
2015 over a year earlier); trade, restaurants
and hotels (12.5%) and government services
(6.3%).
Qatar: Contributions to Real Non-Hydrocarbon
Growth (Q2 2015)
(percentage point contributions)
Sources: MDPS and QNB Economics
On the other hand, hydrocarbon GDP was
broadly unchanged in Q2, rising by only 0.9%
year-on-year due to maturing oil fields and the
moratorium on further gas production from the
North Field. With the strong growth of the
non-hydrocarbon sector and the stabilisation
of hydrocarbon production, the Qatari
economy is marching on with its
diversification drive. Consequently, the share
of the non-hydrocarbon sector in GDP rose to
61.7% in the second quarter from 59.8% in the
previous quarter.
Beyond the second quarter, the latest
indicators of the Qatari economy suggest a
continuation of the strong growth and
diversification drive into the second half of the
year. The implementation of investment
projects is moving ahead. This continues to
attract expatriates, resulting in 10.2% year-on-
year growth in population in August.
Therefore, the strong growth in the non-
hydrocarbon sector should continue in Q3
even though oil prices have fallen by 19.4%
2.7%
2.4%
1.6%
1.3%
0.8%
0.4%
0.2%
-0.2%
Financial Services
Construction
Trade, Restaurants & Hotels
Government Services
Manufacturing
Transport and
Communications
Social Services
Others

2. Page 2 of 2
Economic Commentary
QNB Economics
economics@qnb.com
11 October 2015
during the quarter. This suggests that Qatar is
capable of weathering lower oil prices thanks
to a favourable macroeconomic environment
characterised by low inflation, large external
surpluses and healthy fiscal balances.
We therefore expect this environment to be
conducive to future growth and
diversification. We forecast real GDP growth
will reach 4.7% in 2015 on the basis of double-
digit growth in the non-hydrocarbon sector.
From then on, real GDP growth is projected to
rise to 6.4% in each of 2016-17 as near-double-
digit non-hydrocarbon growth will be
supplemented by increased gas production
from the Barzan project. This was initiated to
meet rising domestic gas demand for power
and other industrial uses, with first production
expected later this year.
QNB Economics Team:
Ziad Daoud*
Acting Head of Economics
+974-4453-4642
Rory Fyfe
Senior Economist
+974-4453-4643
Ehsan Khoman
Economist
+974-4453-4423
Hamda Al-Thani
Economist
+974-4453-4642
Rim Mesraoua
Economist – Trainee
+974-4453-4642
* Corresponding author
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