1.
Weekly Commentary
QNB Economics
economics@qnb.com.qa
October 6, 2013
Disclaimer and Copyright Notice: QNB Group accepts no liability whatsoever for any direct or indirect losses arising from use of this report.
Where an opinion is expressed, unless otherwise provided, it is that of the analyst or author only. Any investment decision should depend on the individual
circumstances of the investor and be based on specifically engaged investment advice. The report is distributed on a complimentary basis. It may not be
reproduced in whole or in part without permission from QNB Group.
Qatar’s Economy Maintains Its Strong Growth
Momentum, According to QNB Group
Qatar’s economy continued to maintain its
strong growth momentum in the second quarter
of 2013, according to QNB Group. Qatar’s real
GDP expanded at a robust 6.0% pace (year-on-
year), spurred by double-digit growth in
construction, transport and communication, and
financial, real estate, and business services. The
economy expanded at a similar pace in the first
quarter of 2013, according to revised figures.
QNB Group expects real GDP growth to
accelerate during the second half of the year
(reaching 6.5% for the full year) and into 2014
(6.8%), as the implementation of large
infrastructure projects accelerates and higher
population boosts aggregate demand.
The growth figures for the second quarter of
2013 confirm the continued process of economic
diversification of Qatar’s economy away from its
traditional role as a hydrocarbon exporter
towards a manufacturing and services hub (see
chart). The oil and gas sector only expanded by
1% year-on-year in Q2 2013, reflecting the
moratorium on further exploration of the North
Field. On the other hand, financial, real estate,
and business services was the fastest growing
sector (15.4% year-on-year), as banking
intermediation accelerated and real estate
services were boosted by the growing
population. Construction activity accelerated
(11.4% year-on-year) as Qatar’s infrastructure
development program is gathering momentum.
In addition, manufacturing grew by 6.4%,
boosted by production from the new Pearl gas-
to-liquids (GTL) facilities.
Qatar Real GDP Growth by Sector
(% change year-on-year, Q2 2012 – Q2 2013)
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
Q2
12 Q3
12 Q4
12 Q1
13 Q2
13
Oil
and
Gas
Industry
Services
Real
GDP
5.8
5.2
6.6
6.1 6.0
Sources: Qatar Statistics Authority (QSA) and QNB Group analysis
The actual figures for the second quarter of 2013
are in line with QNB Group’s full-year forecast of
6.5% growth in 2013 and 6.8% in 2014, as
highlighted in QNB Group’s latest Qatar
Economic Insight report. The acceleration in
economic activity in the second half of 2013 is
expected to be driven by the implementation of
additional large infrastructure projects, like the
Doha Metro Rail project. The key driver of
growth will therefore continue to be the non-
hydrocarbon sector at least until 2015, when the
Barzan gas project is expected to start
production.
This large infrastructure investment program will
have a direct effect on growth through higher
investment spending and an indirect effect
through population growth. A new wave of
expatriate workers is coming into Qatar to
respond to higher labor demand from

2.
Weekly Commentary
QNB Economics
economics@qnb.com.qa
October 6, 2013
Disclaimer and Copyright Notice: QNB Group accepts no liability whatsoever for any direct or indirect losses arising from use of this report.
Where an opinion is expressed, unless otherwise provided, it is that of the analyst or author only. Any investment decision should depend on the individual
circumstances of the investor and be based on specifically engaged investment advice. The report is distributed on a complimentary basis. It may not be
reproduced in whole or in part without permission from QNB Group.
infrastructure spending. As a result, we expect
population and thus the labor force to grow
rapidly over the next two years. This increased
level of job growth, and thus higher disposable
incomes, should boost aggregate domestic
consumption, which will be a key driving force of
GDP growth in the medium term.
Whilst the rapid expansion of Qatar’s economy
does not seem to be running into any major
supply-side bottlenecks, the rapidly expanding
population is indeed putting some strain on the
country’s infrastructure networks. Indeed, with
Qatar’s population more than tripling in the last
12 years, there has been a parallel increase in
the number of vehicles on the roads (876,039
vehicles in 2012, compared with 287,500 in
2000). However, large infrastructure projects are
being rolled out, such as, the new Doha Port and
the new Hamad International Airport, which will
greatly ease some of the infrastructure
constrains facing the transportation system
going forward.
Furthermore, consumer price index (CPI)
inflation has stabilized at a moderate level
(3.1%) in August 2013. Rents, which are nearly
a third of the CPI, are rising but the rate of rental
increases has been slowing in recent months
while non-rent inflation has fallen. The latest CPI
inflation data is in line with QNB Group’s
forecast for 3.6% inflation in 2013 as a whole,
increasing slightly to 3.8% in 2014.
Looking ahead, with strong growth, stable
inflation and high current account surpluses,
Qatar’s economic momentum for the second half
of 2013 and throughout 2014 is expected to
strengthen. Large-scale infrastructure spending,
as part of the build-up towards the 2022 World
Cup in Qatar, will drive the expansion in
construction and transportation, while strong
population growth leads to higher aggregate
demand for housing, financial and social
services.
** Ends **