Owing to continued disruptions in the production and export of liquefied natural gas (LNG)--Qatar's key export--we forecast a sharp contraction in real GDP growth (about 14%) and a fiscal deficit of 6% of GDP in 2026. Our base case assumes Middle East disruptions continue into 2027. Despite this, we anticipate a strong macroeconomic recovery in 2027 tied to the North Field LNG expansion, which we understand will go ahead as planned. We expect Qatar's large stock of accumulated liquid assets (estimated at 200% of GDP) to help mitigate the impact of ongoing regional conflict and supply disruptions in the Strait of Hormuz. A reescalation of conflict--either by large-scale military activities, severe damage to LNG infrastructure, or a prolonged effective closure
