World Economy

Qatar Non-Oil Sector Diversifies Economy

Qatar Non-Oil Sector Diversifies Economy Qatar Non-Oil Sector Diversifies Economy

The non-hydrocarbon sector in Qatar continues to drive economic growth, supporting the diversification of the economy.

Real GDP growth accelerated to 5.7 percent in Q2 2014, from a revised 5.4 percent in the previous quarter, according to figures released by the ministry of development planning and statistics (MDPS), Arab News reported.

Rapid growth in the non-hydrocarbon sector (11.3 percent) was spurred by large investments in major infrastructure projects and by the fast growing population. On the other hand, the hydrocarbon sector declined 2.2 percent year-on-year as a result of lower crude oil production and temporary gas production shutdowns.

The latest growth figures confirm Qatar’s ongoing rapid process of economic diversification away from its traditional role as a hydrocarbon exporter toward a manufacturing and services hub. Financial, real estate, and business services were the fastest growing sector (16.6 percent year-on-year in Q2 2014) as banking intermediation accelerated and real estate services were boosted by the demand for housing for the growing population.

Trade, hotels and restaurants also grew strongly (11.1 percent year-on-year) on the back of the growing population and increased tourist activity. Major infrastructure projects, notably the new metro in Doha, major real estate projects such as Musheireb in the center 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 14.5 percent year-on-year expansion in construction activity.

In addition, transportation and communication increased by 11.8 percent year-on-year, predominantly owing to increased passenger flows through the new airport.

The pickup in growth came despite a significant contraction in the hydrocarbon sector in Q2 2014.

This decline reflects a fall in crude oil production and the temporary shutdown of a number of gas plants for maintenance.

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.

In the future, the only gas project expected to add to growth is Barzan, which is only for domestic supply and should add incremental growth to hydrocarbon GDP annually during 2015-23.

The latest GDP numbers are in line with the country’s overall development plan outlined in the National Vision 2030 and the National Development Strategy 2011-16, which aim to diversify the economy away from its dependence on hydrocarbons to achieve more sustainable growth and create jobs.