S&P keeps Qatar at AA despite projected 14% economic contraction

Summary

• S&P affirmed Qatar's AA rating with a stable outlook on Friday 30 October.
• The agency projects real GDP shrinking 14% in 2026, then rebounding 15% in 2027.
• Net government assets near 135% of GDP keep Qatari borrowing costs contained.

The latest

Qatar held its AA sovereign rating with a stable outlook even as S&P Global Ratings forecast a 14% contraction in real GDP this year. The agency said large external and financial assets, plus net government holdings it estimates at about 135% of GDP, are enough to absorb the regional conflict and the disruption of shipping through the Strait of Hormuz, according to CNBC Arabia and The National.

Details

• The rating: S&P affirmed Qatar's sovereign credit rating at AA with a stable outlook on Friday 30 October, according to CNBC Arabia and The National. The affirmation rests on what the agency describes as a large stock of external and financial assets and liquid reserves available to the state through the current shock.
• The growth path: The agency projects real GDP contracting 14% in 2026, followed by a 15% rebound in 2027 and average growth of roughly 8% across 2028 and 2029. Inflation is expected to rise modestly to about 4% over the same horizon.
• The LNG damage: About 17% of Qatar's liquefied natural gas export capacity is offline after Iranian strikes damaged two of the country's 14 export trains, S&P said. The idled capacity amounts to 12.8 million tonnes a year, a direct hit to the state's single largest revenue stream.
• Repair timeline: QatarEnergy says bringing the damaged trains back will take three to five years, according to the agency's assessment. That sits well beyond the 2027 rebound S&P projects, meaning the recovery is modelled without full restoration of pre-strike export capacity, and no firmer restoration date was attached.
• The chokepoint: More than 90% of Qatar's exports pass through the Strait of Hormuz, S&P noted. The agency cautioned that even a safe reopening of the waterway would restore only part of prewar supply volumes, because the lost train capacity is a physical constraint rather than a shipping one.
• The buffer: The liquid assets underpinning the rating include balances held at the Financial Stability Fund, the Qatar Investment Authority and the Qatar Central Bank. S&P said those holdings let the government fund its needs, contain budget and external pressure, and support a recovery if the disruption persists.
• The fiscal math: Net general government assets are estimated at roughly 135% of GDP in 2026, a cushion that allows Doha to run deficits without forced asset sales or emergency borrowing. It is the central reason the outlook stayed stable rather than moving to negative, and no threshold was given for what prolonged disruption would change it.

Background

Qatar is among the world's largest LNG exporters, with volumes shipped almost entirely through Hormuz. Its North Field expansion program was built to lift capacity sharply this decade, making train availability the decisive variable for both state revenue and long-term supply contracts.

Between the lines

The affirmation is a statement about Qatar's balance sheet, not its output. S&P is pricing a sovereign that loses 17% of LNG export capacity for three to five years yet still carries net government assets near 135% of GDP. That gap explains why a double-digit contraction and a double-digit rebound can sit inside the same stable outlook: the shock is to volumes, the rating is anchored to reserves.

What's next

Watch QatarEnergy updates on repair progress at the two damaged trains, Hormuz transit conditions affecting the 90% of exports routed through it, and whether 2027 output tracks the projected 15% rebound.

Source: CNBC Arabia, The National