Initial estimates indicate that real GDP growth picked up to +2.2% y/y in Q3 from +1.7% in Q2. However, the latter was sharply revised downwards from a previous estimate of +2.5% y/y. As a result, we have lowered our estimate for full-year growth in 2018 to +2% (from +2.6%). The acceleration in Q3 was mainly due to a narrowing of the contraction in the hydrocarbon sector to -0.1% (from -3.8% in Q2) while growth in the non-hydrocarbon sector moderated to +4.3% (from +7.2% in Q2). Notably the manufacturing sector dropped by -2% (from +20.6% in Q2) while the construction sector continued to expand strongly (+12.1%, after +15% in Q2). At the start of this year, Qatar withdrew from OPEC, highlighting the policy rift with its neighbors as well as its gas-focused growth strategy. In the near term, this will allow it to raise oil production in 2019 as it will not have to comply with the renewed output cuts agreed by OPEC in December. We forecast full-year growth of +2.7% in 2019.
