The GCC region’s non-oil growth is projected to rise gradually from 2.5 per cent this year to 3.3 per cent by 2018, as the economies gradually digest the ongoing reforms, according to a regional economic outlook released by the National Bank of Kuwait (NBK).

Led by Qatar, UAE and Kuwait, the GCC region’s non-oil growth is expected to be a decent 3 per cent on average in 2017-2018, added the Peninsula Qatar report.

On Qatar’s outlook for the first quarter of 2017, the research note said that the spending will still remain elevated by historical standards; fiscal deficits will continue to be financed primarily through bond issuance, pushing central government debt well above 50 per cent of gross domestic product (GDP).

With the outlook for oil prices improving in 2017-2018, Qatar’s bank credit and deposit growth are also expected to pick up by 2018 and liquidity constraints to ease somewhat, though banks’ reliance on foreign deposits and rising borrowing costs represent near-term challenges, it said.

Led by average annual double-digit increases in the construction, manufacturing, financial services and trade and tourism sectors over the last five years, the non-hydrocarbon sector has grown by an impressive 10 per cent year-on-year on average since 2011 in Qatar, easily the most robust growth in the GCC.

With the oil price decline most pronounced in 2015, however, nonhydrocarbon growth moderated to 8.2 per cent as the government pared back capital spending; projects, especially non-essential and non-Fifa-related, were streamlined.

Qatar's gross government debt (domestic and external debt) is projected to increase from an expected 60 percent of GDP in 2016 to 68.6 percent of GDP by end- 2018.  Fiscal buffers appear sufficient for the time being, the report said.