GDP growth in 2017 slowed to 1.6 percent, the weakest in over two decades, mainly due to the diplomatic rift between GCC countries and Qatar, which culminated in the severing of trade and diplomatic ties in mid-2017. Growth was also weighed down by fiscal consolidation efforts in response to lower oil prices. Quarterly data show the economy has successfully adjusted to the shock, with growth rising to 3.3 percent yoy in Q4 2017 (versus an average of 1 percent in the previous three).
Growth is expected to recover to 2.3 per-cent in 2018, rising to 3 percent over the medium term, as rising energy receipts help ease fiscal constraints, spending on the multi-year FIFA-related infrastructure upgrade continues and as the US$10 billion Barzan natural gas facility comes onstream in 2020.