Real GDP growth picked up to +2.5% y/y in Q2 from +2% in Q1 (the latter was revised upwards from a previous estimate of +1.4% y/y). The acceleration in Q2 was mainly due to a narrowing of the contraction in the hydrocarbon sector to -1.1% (from -2.1% in Q1) while growth in the non-hydrocarbon sector rose slightly to +6.1% (from +5.8% in Q1). Notably, the manufacturing (+14.1%) and construction (+15.3%) sectors continued to expand strongly. We expect the hydrocarbon sector to recover further in H2 thanks to the revised OPEC agreement from end-June which should result in an increase in Qatari oil output. Hence we project GDP growth to accelerate further in H2 and reach +2.6% in 2018 as a whole. Meanwhile, consumer prices contracted by -0.4% y/y in September, after a +0.6% increase in August, driven by declines in prices for communication (-11.9%), recreation and culture (-4.6%), utilities (-2.9%) and foodstuff (-2.5%). We expect average inflation of +0.4% in 2018.
