Qata

1. Page 1 of 2
Economic Commentary
QNB Economics
economics@qnb.com
12 July, 2015
Qatar’s diversification drive continues in Q1 2015
Qatar’s economy registered another strong
performance in the first quarter of 2015,
growing by 4.1% year-on-year, according to
the latest data released by the Ministry of
Development Planning and Statistics (MDPS).
Growth was spurred by the strong expansion
in the non-hydrocarbon sector. Hydrocarbon
production, meanwhile, remained broadly
stable. The latest data are evidence to Qatar’s
ongoing process of economic diversification
away from its traditional role as a hydrocarbon
exporter. Strong macroeconomic fundamentals
provide the economy with the necessary
buffers to withstand the impact of lower oil
prices.
The non-hydrocarbon sector continues to be
the engine of growth in the economy,
expanding by 8.9% year-on-year in Q1 2015.
The largest contributors to real non-
hydrocarbon growth were construction,
financial services and manufacturing.
Construction activity increased 11.4% year-
on-year as large scale infrastructure projects
remain the main driver of economic activity in
Qatar. Such projects include the new Doha
metro, real estate projects such as Musheireb
in the centre of Doha and Lusail to the north,
as well as new roads, highways and further
expansion of the new Hamad International
Airport. The implementation of infrastructure
projects is attracting a large influx of
expatriates, with population growing by 10.0%
in Q1 2015 over a year earlier. Rapid
population growth is stimulating growth in the
services sector like financial services (with
annual growth rate of 9.8% in Q1), trade,
hotels and restaurants (9.3%) and government
services (5.8%).
As well as the “horizontal diversification”
away from hydrocarbons, Qatar is also
undergoing a “vertical diversification” process.
This is reflected in the expansion in refinery
and petrochemical activities to move up the
hydrocarbon value chain. The strong growth
in manufacturing (9.0%) is a confirmation of
this type of diversification.
Qatar: Contributions to Real Non-Hydrocarbon
Growth (Q1 2015)
(percentage point contributions)
Sources: MDPS and QNB Economics analysis
On the other hand, the hydrocarbon sector,
which consists of crude oil and raw gas
production, contracted by 0.1% year-on-year
in Q1 2015 as a result of lower crude oil output
as well as shutdowns for maintenance at gas
facilities. However, we expect the
hydrocarbon sector to recover in the medium
term, as gas production is expected to increase
due to the Barzan gas project coming on
stream while crude oil and condensate
production is forecast to remain stable.
-0.1%
0.1%
0.2%
0.3%
1.1%
1.2%
1.5%
1.8%
2.7%
Electricity and water
Social services
Transport and communication
Government services
Trade, hotels and restaurants
Construction
Manufacturing
Financial services
Others

2. Page 2 of 2
Economic Commentary
QNB Economics
economics@qnb.com
12 July, 2015
Qatar: Real GDP by Sector
(% change, year-on-year)
Sources: MDPS and QNB Economics analysis
As well as releasing GDP data for Q1, the
MDPS has rebased the GDP series to a new
base year, 2013 (previously 2004). GDP is
typically measured by reference to the
structure of the economy in a “base” year. The
weight given to each sector depends on its
importance to the economy in the base year.
Qatar’s old GDP data relied on a snapshot of its
economy in 2004. The structure of the
economy has evolved since then, and
therefore, the base year was updated to 2013.
As a result, the share of the hydrocarbon
sector in real GDP has increased, reflecting
higher oil prices in 2013 compared to 2004. As
rebasing has increased the weight of the
slower-growing sector (hydrocarbons) in GDP
at the expense of the faster-growing sector
(non-hydrocarbons), growth in 2014 was
revised down to 4.0% from 6.1% before
rebasing.
Overall, we expect the diversification drive to
continue and for the non-hydrocarbon sector
to increase its share of GDP. Low inflation,
healthy fiscal balances and significant current
account surpluses should provide a conducive
macroeconomic environment for the growth
momentum to continue gathering steam.
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
Rim Mesraoua
Economist – Trainee
* Corresponding authors
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16.7%
13.0%
6.0% 6.3%
4.0% 4.1%
-5%
0%
5%
10%
15%
20%
25%
2010 2011 2012 2013 2014 Q1 15
Non-Hydrocarbon Hydrocarbon Total