Qatar

Regional conflict and LNG disruptions weigh heavily on growth

In the scenario of a prolonged war, Qatar’s growth is expected to contract sharply in 2026 due to disruptions in LNG production and export logistics, as well as disruptions to maritime trade transiting the Strait of Hormuz. Qatar is one of the world's largest LNG exporters, but it is heavily reliant on the Strait of Hormuz for its export. The deterioration of regional security conditions has had a significant impact on hydrocarbon flows. Iranian missile attacks in March 2026 destroyed about 17% (two of its 14 liquefaction trains) of Qatar’s LNG export capacity at the Ras Laffan facility. Repairs are estimated to take three to five years. Despite a partial resumption after the regional ceasefire from 22 April, recovery of the facility remains slow and will delay the North Field East expansion by up to a year. Consequently, natural gas production is expected to fall by 20%, reaching 130 billion cubic meters (bcm) in 2026, down from the previous year. Spillovers to the non-energy economy are expected through weaker economic confidence, delayed investment decisions, fewer imports, a decline in tourism activity (8% of GDP in 2025) and tight financial conditions. Uncertainty surrounding regional security conditions will likely postpone private-sector projects and external investment inflows. In 2026, tourism arrivals are expected to decline by 20% year over year (yoy) to approximately 4 million, which will negatively impact the outlook of other tourism-related sectors, such as retail and transportation. Industrial production, including petrochemicals and fertilisers, will also face lower output and profitability because it relies heavily on gas feedstock. Disruption of export routes will also hinder helium exports, for which Qatar supplies one-third of global demand. Elevated input costs, lower confidence, and weaker demand will also affect the construction sector (around 10% of GDP). Construction companies will face project delays, longer payment periods and tighter financial conditions.

Inflationary pressures will rise moderately driven by lingering pressure on imported goods (i.e., food, beverages, cars, vehicle components, textile and clothing products) and the added shipping and rerouting costs associated with the conflict. This will weigh on households’ purchasing power, including those of low-income expatriates, and weaken the private demand. However, administered prices and the exchange-rate peg should limit the pass-through of inflation. Despite the introduction of liquidity support through reserve requirement ratios and increased funding through repo auctions intended to offset the impact of the war, the monetary policy stance is not expected to ease rapidly. This depends on the steps taken by the US Federal Reserve in response to rising inflationary pressures, given the dinar’s peg to the US dollar.

Energy export disruptions weaken fiscal and external balances

The attacks on the energy infrastructure at Ras Laffan and the closure of the Strait of Hormuz will cause Qatar’s current account surplus to virtually evaporate in 2026 due to the fall in hydrocarbon, petrochemicals and services exports. LNG exports, which account for roughly 80% of Qatar’s gas exports, are expected to fall by 40% in 2026 compared to 2025, as the country depends entirely on the Strait of Hormuz to ship its exports. Security concerns and loss of confidence will negatively impact service exports by reducing tourism and transportation. The blockade of the Strait of Hormuz has logistically isolated the country, preventing container ships from entering through Hormuz which is a drag on import volumes. This has forced Qatar to switch to air and road transportation. However, since air cargo cannot match the massive volume of ships, imports are expected to plummet, which will partly offset the fall in exports.

Lower energy revenues (which account for 80% of total fiscal revenues) and non-energy revenues will both widen the fiscal deficit. Energy revenues will be affected by the fall in exports due to the closure of the Strait of Hormuz, while non-energy revenues will be impacted by reduced domestic activity and fewer tourist arrivals. To soften the impact of the regional war, the authorities have announced targeted fiscal stimulus measures aiming at supporting businesses and investor confidence. These measures include direct financial relief, such as subsidies covering up to 40% of eligible expenses, and incentive programs supporting projects worth approximately QAR 2.8 billion. These measures will also contribute to the widening of the fiscal deficit. However, this is not expected to pose structural risks to public finances in the short term as the country benefits from a relatively low debt level and ample buffers, including an estimated USD 600 billion (roughly 200% of GDP) in the Qatar Investment Authority (QIA) sovereign wealth fund and international reserves equivalent to USD 70 billion (nearly 26 months of imports).

Regional geopolitical tensions are the main source of risk

Qatar benefits from a stable domestic political environment characterised by a centralized decision-making framework. There are no major political factions as the government is united behind the Emir, who appoints it. Political stability should prevail as the local population is largely satisfied with its quality of life despite the recent surge in inflation due to the war in Iran and with their standard of living, partly due to social spending and subsidies.

Qatar has maintained balanced diplomatic relations on the international stage. The country is likely to continue positioning itself as a diplomatic intermediary, supporting mediation efforts and regional dialogue between regional and global actors. Qatar's relations with Iran reflect a degree of structural interdependence; the two countries share the world’s largest natural gas field, the North Field/South Pars, and have undergone increased tension since the outbreak of war in February 2026. Iranian strikes reached Qatari territory during the conflict, escalating tension between the two countries despite prior cooperative relations. Relations with Türkiye are expected to remain strong, supported by close political alignment, defence cooperation and trade ties. While Qatar remains an important source of investment for Türkiye, Türkiye provides an additional security and strategic presence beyond Qatar’s traditional Western partners. Since the end of their regional diplomatic rift in 2021, Qatar has improved its relations with GCC partners. However, strategic competition with some Gulf partners, such as the UAE, is likely to persist in the fields of aviation, regional investments, regional influence, and logistics activity. Qatar hosts one of the largest US military facilities in the Middle East, which reinforces its strategic partnership with the US and its security position in the region. Bilateral ties are strong thanks to energy, trade and investment ties between the two countries. However, following US/Israeli intervention in Iran, Qatar will be more exposed to regional tensions and their consequences, such as Iran's closure of the Strait of Hormuz, the transit passageway for Qatari exports and most imports.

Updated : June 2026