In the Name of Allah the Most Merciful, the Most Compassionate. Brothers and sisters, members of the advisory council, it gives me pleasure to meet with you on this auspicious annual occasion of the opening of a new session of your esteemed council. A day marking the beginning of a new legislative term, in which our constitutional institutions will proceed with their responsibilities to reach the goals we have set ourselves, from economic growth to keeping up with the achievements of contemporary human civilization and the formulation of our Qatari Arab and Islamic identity and culture on sound moral and civilized grounds.
Since our last meeting, Qatar's economic invulnerability against external tremors has been boosted, and our self-reliance has increased. The bonds with our allies have become stronger than before, and our relations with most of the world's countries have only deepened. Most importantly, Qataris have become more committed to the ethics they are renowned for; their awareness of the scale of their country's accomplishments; the importance of its national sovereignty; and the independence of our political decisions, under which these accomplishments were achieved, have been deepened.
Brothers, members of the advisory council, the world economy witnessed an economic recovery in 2017 involving most countries and regional and economic blocs, including developed countries, among them the US, the eurozone, and Japan. However, this improvement did not include the Middle East, North Africa, or the GCC countries, including the state of Qatar.
But growth in Qatar was the least affected, and a drop in our hydrocarbon output was coupled with about 4% growth in GDP from other sources, reflecting the role of economic diversification as an important growth component.
Exports rose 18%, leading to a significant improvement in the public budget, trade balance, and current account. The banking system recovered in less than 10 months to its pre-blockade levels, while certain indications even improved. In addition, the Qatar Central Bank regained its reserve level, and the Qatari Riyal has maintained its value and free circulation. The state continued to provide funding for World Cup projects without compromising those required to achieve the National Vision.
It is noteworthy that the number of factories operating in the state has also increased by about 14% since the blockade, and these have managed to achieve a great deal of self-sufficiency in certain food products and consumables. While the role of the private sector was pivotal in achieving these results, we expect from it an even greater readiness for direct investment and bolder initiatives.
Honorable brothers, we are moving at a steady pace to achieve water and food security, and to secure sufficient electrical energy to spur further development. The first phase of the Strategic Water Reservoir Project was inaugurated, and work is proceeding to commission the remaining phases by the end of 2019, with a 155% increase over the current freshwater stock. The Umm Al-Houl station in the Economic Zone has also come onstream and will soon open. This megaproject will increase Qatar's electricity production by about 30% and water desalination by about 40%.
The state has adopted a conservative fiscal policy to reduce spending necessitated by the sharp drop in oil and gas prices since 2014. We had to strike a balance between spending cuts, which are also beneficial to the state and community, and the expenditure requirements dictated by pursuing infrastructure investments and key development projects for the World Cup, which has not been an easy task; however, the signs of success of this policy have started to be seen, by the grace of Almighty God and by virtue of the joint efforts and cooperation among all the government's monetary, fiscal, investment, and economic institutions. Government expenditure this year decreased by around 20% from the previous year, while household spending rose by 4%. This policy is expected to lead to a budget surplus this year, one that will increase in coming years.
Qatar has been able to overcome the impacts of the blockade to a large extent, and economic institutions and financial markets share our optimism. The World Bank expects Qatar's economic growth rate to reach 2.8% in 2018, and rise to around 3% in the following years. Global credit rating agencies have also revised their outlook for Qatar's economy from negative, immediately after the blockade, to stable, thus reflecting their favorable expectations for the financial and economic performance of Qatar in the future. Confidence of the international financial institutions in the future performance of Qatar's economy was evident when Qatar raised USD12 billion in a sovereign bond issue in the international financial markets. The volume of subscription for the Initial Public Offering reached USD53 billion, at moderate interest rates.
Brothers and sisters, Qatar National Vision's goal to achieve economic diversification and reduce dependence on oil and gas have never meant neglecting the oil and gas sector, the basic source of our wealth. Rather, economic diversification aims to achieve growth without being affected by fluctuations in the price of these two sources. But it is necessary to constantly develop them, and preserve the wealth that God has bestowed upon us, for us and for our future generations.
In this context, I would like to refer to certain important developments in this sector. First, preliminary studies have been completed for the development of a major project for the production of LNG from the North Field, whereby Qatar will maintain its position as the world's largest liquefied natural gas exporter for many years to come.
Second, the merger of Qatar Gas Company and Ras Gas Company was carried out so that gas production, liquefaction, and marketing will be led exclusively by one company. The merger was aimed at unifying the distinctive resources and potential of the two companies and creating a unique energy player in terms of scale, efficiency, and centrality, as well as reducing annual operating costs, as the merger saves about QAR2 billion annually.
Third, Qatar Petroleum will become more global by participating in oil and gas exploration and production abroad. Exploration and production agreements were concluded with Oman, Brazil, Mexico, Argentina, and South Africa in partnership with international and Gulf-based oil companies.
Our oil exports have not been affected by the blockade; the state has been keen to fulfill all its obligations under existing contracts, and has concluded several long-term contracts, the latest of which was with Petro China, whereby Qatar will supply various Chinese districts with about 3.4 million tons of liquefied natural gas annually. This agreement extends until 2040.
Brother members of the advisory council, regarding the Qatar National Vision, the Second National Development Strategy 2018-2022 entered its implementation phase at the beginning of the year. All ministries and government agencies have started to activate the programs of this strategy by continuing to develop infrastructure, promoting economic diversification, developing the private sector, rationally managing our natural resources, protecting the environment, promoting human development by introducing a comprehensive and integrated health care system, implementing a quality education system, and building up an efficient and committed workforce. It is also aimed at perfecting social development through the application of justice and the provision of security for all citizens and residents, while working for cultural enrichment and athletic excellence.
The human being remains the core focus and target of our development plans. High living standard for citizens must be coupled with values, cultural evolution, and care for morality. Otherwise, the possibility of welfare degenerating into a state of social corruption based on an unproductive and constantly resentful culture of consumerism and rising sense of entitlement. To prevent this, parents and teachers must educate children.
A modern society and state and a developed economy have emerged in Qatar. We have transformed the oil and gas economy into an advanced industry. In order to pursue development and achieve sustainability, and avoid slipping into the chasms of the economy of consumerism and the culture of social reliance and indifference, it is necessary to emphasize work and its ethics. Both quantitatively and qualitatively, this means respecting work time, fulfilling promises, and observing honesty in assignment reports. They are based on a sense of duty and responsibility towards society and the state and participating in burden-shouldering. This leads to modesty and an appreciation of the value of work, including that done by others, and the adoption of competence and qualification as a basis for recruitment and promotion, without regard to one's background. Hence the importance of national service and its role in building the youth of this country.
Brothers and sisters, the security and stability of our Gulf and Arab countries will not be achieved by infringing the sovereignty of states, but only through respecting the rules that regulate relations among them, and working to resolve differences through dialogue that takes into account the interests of all parties concerned. History teaches us that crises are destined to pass, but that their mishandling may leave behind long-lasting repercussions. It is unfortunate that the ongoing Gulf crisis revealed the failure of the GCC to attain its goals and meet the aspirations of our Gulf peoples, which weakened its capability to face the challenges and risks, marginalizing its regional and international role. It is hoped that the current crisis will be used to develop the council on sound foundations, including dispute resolution mechanisms, and ensure that the same disputes are not repeated.
Undoubtedly, the deterioration of the pan-Arab situation, including the Gulf, strips the Arab world of its unity and ability to cope with the aggravation of various issues we suffer from in Palestine, Syria, Yemen, Libya, and elsewhere. However, Qatar will remain, as it has always been, an active and supportive agent in all exerted efforts to resolve differences and confront the challenges and dangers surrounding the Arab and Islamic Ummas, and in dealing effectively with the issues and problems that threaten international peace and security.
The Palestinian cause remains at the top of our priorities. And in light of the continued Israeli intransigence and lack of will to achieve a comprehensive and just peace in imposing a fait accompli policy, we call upon the international community to put Israel at the forefront of its responsibilities to stop all illegal practices against the Palestinian people, end the unjust siege on the Gaza Strip, halt the settlements in the occupied Palestinian territories, as well as other continued violations of the rights of the Palestinian people, and resume peace negotiations in accordance with the principles of international law based on the two-state solution, the right of return, and the right of the Palestinian people to establish an independent state with Jerusalem as its capital.
In regards to Yemen, we reiterate our concern for the stability, unity and territorial integrity of that nation. We call upon all parties to cease fighting and resort to dialogue to resolve this crisis politically. It has been proven that there is no military solution to Yemen's disputes. On the Syrian question, we have been keen, since the onset of the crisis, on keeping Syria as a united country, and we support all regional and international efforts to ensure the success of a political solution that will bring Syria out of its crisis, and fulfill the aspirations of the Syrian people for freedom, justice, security, and stability, in accordance with the declaration of the Geneva Conference. We also look forward to accelerating the political solution in Libya and call upon all factions and groups of the Libyan people to achieve national reconciliation, build a state and its institutions, put an end to the suffering of the brotherly Libyan people and achieve security and stability. May God bless you with success and may God's Peace, Mercy and Blessings be upon you.