Spurred by large investments in major infrastructure projects, Qatar’s non-hydrocarbon sector is increasingly driving economic growth, QNB Group says.
Qatar’s non-hydrocarbon sector accounts for 50.7 per cent of GDP in Q3 2014 for the first time from 49.0 per cent in Q2 2014.
Real GDP growth accelerated to 6.0 per cent in the year to Q3 2014 from 5.7 per cent in the previous quarter, says QNB Group, citing the Ministry of Development Planning and Statistics (MDPS).
Growth in the non-hydrocarbon sector averaged 11.9 per cent in Q1 2014 to Q3 2014, even higher than our forecast of 11.2 per cent for the full year, says QNB.
On the other hand, the hydrocarbon sector declined 2.8 per cent year-on-year as a result of lower crude oil production and temporary gas production shutdowns for maintenance.
The latest GDP figures confirm Qatar’s ongoing rapid process of economic diversification away from its traditional role as a hydrocarbon exporter towards a manufacturing and services hub.
Major infrastructure projects, notably the new metro in Doha, major real estate projects such as Musheireb in the centre of old Doha and Lusail to the north, as well as new roads, highways and the further expansion of the new Hamad International Airport, resulted in a 18.5 percent year-on-year expansion in construction activity – the fastest growing sector, says QNB Group.
An increase is seen in transportation and communication by 10.5 per cent year-on-year, predominantly owing to increased passenger flows through the new airport, it adds.
Financial, real estate, and business services also grew robustly (13.7 per cent year-on-year in Q3 2014) as banking intermediation accelerated and real estate services were boosted by the demand for housing for the growing population.
In addition, trade, hotels and restaurants also grew strongly (13.7 per cent year-on-year) on the back of the growing population, the seasonal Ramadan effect as well as increased tourist activity.
Hydrocarbon sector shrinks
The hydrocarbon sector contracted in the year to Q3 2014 as a result of lower crude oil output and shutdowns for maintenance at gas facilities.
A moratorium on new projects at Qatar’s largest gas field, the North Field, means that increases in gas production are likely to be limited.
The plan aims to diversify the economy away from its dependence on hydrocarbons to achieve more sustainable growth and create jobs.
By investing heavily in major non-hydrocarbon projects the authorities are attracting a new wave of expatriate workers to Qatar.
Indeed, population continued its near double-digit growth (9.7 per cent year-on-year) in November 2014, driven by the large ramp up in infrastructure spending.
Accordingly, small and medium-sized enterprises, such as hotels, education, medical services, retail and restaurants are expected to flourish in order to cater to the growth of the population.
As such, this increased level of population growth should boost aggregate domestic consumption and add to non-hydrocarbon GDP growth going forward.