Despite the ongoing blockade, Qatar is expected to climb new growth highs this year. The country’s overall real Gross Domestic Product (GDP) growth will exceed 2.8% this year from the earlier forecast of 2.5%, Qatar National Bank (QNB) said. 

The bank said it was revising up its Qatar GDP growth forecasts for three main reasons, reported Gulf Times.

First, QNB recently raised its forecast for oil prices from $55 a barrel to $63 a barrel, which will lead to higher incomes and spending in the non-hydrocarbon sector. 

Second, it now expects a sharper rebound in hydrocarbon output as maintenance on LNG production facilities appears to have been dragged out in 2017, but should now be completed. 

Third, the economic impact of the blockade has been less than expected and QNB has, therefore, reduced the expected drag from the blockade on 2018 GDP. 

As a result, QNB is now forecasting overall real GDP growth of 2.8% in 2018 from 2.5% previously. 

According to QNB, Qatar’s GDP growth in the fourth quarter of 2017 was held back by the hydrocarbon sector.

The latest data showed an unexpected drop of 6.4% in hydrocarbon production in Q4 from the previous quarter. Given that crude oil production increased by 3.2% over this period, the drop in hydrocarbon GDP must be due to gas production, most likely as a consequence of temporary shutdowns for routine maintenance on LNG facilities. 

Meanwhile, the non-hydrocarbon sector grew 1.6% in the fourth quarter, or 6.6% annually, with the finance, wholesale and retail trade, construction and real estate sectors contributing the most. 

Higher oil prices are likely to give the authorities more comfort in relaxing fiscal constraints and raising investment, which should feed through to higher growth in the non-hydrocarbon sector. 

The impact of the blockade on GDP growth was less than expected in 2017, QNB noted. Notably, the blockade should have had the greatest impact in Q3, but this turned out to be the second strongest quarter in the year.