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Qatar reported a 2.7-percent annual contraction in its mining and quarrying sector, which includes oil and gas production, for the second quarter of the year. The contraction dragged down overall economic growth, with GDP rising by just 0.6 percent from a year earlier. Non-oil growth slowed down to 3.9 percent on an annual basis, compared with 4.9 percent in the first quarter of 2017.
The Gulf state is faring better than the leader of the sanctions against it, Saudi Arabia. Unlike its small neighbor, the Kingdom booked a 1.03-percent GDP contraction for the second quarter, mostly on the back of lower crude oil output, which is part of its deal with OPEC to prop up international prices.
Qatar’s economy is less dependent on these prices—though it is feeling the pinch of the global LNG glut, too—and it is also more diversified. Construction grew by 15.3 percent annually in the second quarter, indicating the building boom in the country will continue, despite a temporary shortage of materials resulting from the blockade its neighbors imposed on Qatar in June.
The food industry also picked up, this time thanks to the blockade that its neighbors imposed on it in June. As part of the blockade, Saudi Arabia closed off its border, which used to be a main food import route, forcing Qatar to become more self-sufficient. This pick-up became obvious in the third quarter, with July food production shooting up 39.8 percent from a year earlier and 9.8 percent from June, when the sanctions were imposed.
Earlier this month, Qatar’s Economy Minister Sheikh Ahmed bin Jassim bin Mohammed al Thani said that the country’s gas export revenues are helping it weather the effects of the economic blockade. Although admitting to incurring additional costs as a result of the sanctions, these were negligible against the backdrop of its natural and financial resources. The official cited IMF data that revealed inflation remaining at 0.8 percent on an annual basis in June and 0.2 percent in July, despite the sanctions.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.