Qatar's economy to jump 15 per cent in 2027 on gas sector recovery, S&P says

Qatar's economy is projected to rebound by 15 per cent in 2027 on expectations that the Gulf nation can bring more gas supplies online, S&P Global Ratings has said.

That would be a sharp swing from a 14 per cent contraction predicted for Qatar's real gross domestic product this year. It is expected to be followed by an average growth rate of 8 per cent over 2028 and 2029, the New York-based agency said on Friday.

About 17 per cent of Qatar’s liquefied natural gas capacity is offline after Iranian strikes damaged two of its 14 export trains, removing 12.8 million tonnes a year from the market.

QatarEnergy has said repairs will take three to five years, meaning even a safe reopening of the Strait of Hormuz would restore access to only part of Qatar’s prewar supply. Gas prices have soared globally due to the disruption.

Government revenue fell 42 per cent in the first half of this year on the drop in LNG exports, Emir Sheikh Tamim said during a Shura Council meeting this month.

But despite continuing disruptions in LNG production, S&P said it expected the North Field expansion to go ahead, albeit with some delays, which will significantly boost Qatar's energy sector to serve overseas demand.

“Increasing demand from rapidly developing Asian economies, coupled with LNG's key role as a transitional fuel in the global energy shift, will support Qatar's export volumes,” analysts at S&P wrote.

“However, a prolonged shutdown or disruption to LNG production and exports remains a key downside risk. The government's economic diversification efforts and the reconstruction of damaged LNG infrastructure will support nonhydrocarbon sector growth over the next two to three years.”

S&P also kept Qatar's AA sovereign credit rating with a stable outlook, citing the country's “sizeable” fiscal and external assets that will enable it to weather a period of security and trade flow disruptions tied to the Middle East conflict. Fitch Ratings has cited similar views for Qatar in its May and September assessments.

An AA rating is the third best on S&P's scale, which is high investment grade and makes it easier to access capital markets and raise funds when the need to borrow arises.

The stable outlook is based on S&P's view that damage to civilian and energy infrastructure will be limited, with a reassessment due if hostilities were to sharply escalate.

Qatar's buffers “provide significant scope to counter volatility, support economic fundamentals, or aid recovery during and after a period of conflict”, analysts at S&P said.

Inflation, meanwhile, is expected to post a modest increase to about 4 per cent, they added.

“Qatar's policymaking, significant asset buffers and the sound financial profiles of many public sector entities, including QatarEnergy, have enabled the country to adapt to stress situations.”

Meta downgraded

Meanwhile, S&P has downgraded Meta Platforms' outlook to negative, citing concerns over the Facebook parent's cash flow as it lags behind its peers when it comes to producing returns from its major investments into artificial intelligence.

S&P analysts argued that Meta's ability to monetise its AI investments – recently updated by the California-based company to a range of $135 billion to $145 billion – is “more limited” than that of its peers.

“While we believe the company intends to monetise these investments via improved advertising tools that support faster ad revenue growth … it is unclear when these revenue streams will generate material contributions that exceed their rising costs over the next few years,” analysts said.

“Meanwhile, several of the company's peers are already monetising their data centre investments by leasing compute capacity to third parties, including frontier model labs and enterprise customers.”