Qatar economy contracts 7% as energy output slumps

Qatar’s economy contracted 7 per cent year on year in the first quarter of 2026 as conflict-driven disruptions sharply reduced hydrocarbon production, official data showed, overwhelming continued growth across much of the non-energy economy.

Gross domestic product fell to 170.8 billion riyals from a revised 183.7 billion riyals in the first three months of 2025, according to figures released by Qatar’s National Planning Council. Compared with the fourth quarter of 2025, output declined 7.9 per cent.

The steepest damage came from mining and quarrying, a category dominated by oil and gas production. Activity in the sector dropped 25.8 per cent from a year earlier to 49 billion riyals, making it the largest drag on overall growth and reducing its share of the economy to less than three-tenths.

The decline reflected the severe interruption to Qatar’s energy industry after fighting in the region disrupted shipping through the Strait of Hormuz and forced production curbs. QatarEnergy shut in LNG production across its facilities on March 2 and later declared force majeure, while damage to energy infrastructure at Ras Laffan added to the operational constraints.

Shell, which holds interests in Qatar’s LNG industry, said one train at the Pearl gas-to-liquids plant was damaged during attacks on March 18. The company said the facility had already been operating at reduced rates because exports were constrained by the Hormuz blockage before production ceased for an assessment of the damage.

The downturn in hydrocarbons contrasted with a 3.5 per cent annual expansion in non-mining and quarrying activities, which reached 121.8 billion riyals and accounted for 71.3 per cent of first-quarter GDP. The figures underscored the extent to which domestic services and construction continued to grow despite the shock to the country’s principal export industry.

Accommodation and food services recorded the strongest annual increase among major non-energy activities, expanding 12 per cent. Wholesale and retail trade grew 9 per cent, construction increased 6.2 per cent, real estate activities rose 6.1 per cent and financial and insurance activities advanced 4.8 per cent, the National Planning Council said.

Public administration activities increased 4 per cent from a year earlier. The council said construction contributed 1.374 billion riyals to growth in real non-hydrocarbon GDP, while wholesale and retail trade added 1.314 billion riyals. Real estate contributed 814 million riyals and financial and insurance activities 774 million riyals.

Weakness was not confined to energy. Transportation and storage activity fell 13.8 per cent from the first quarter of 2025 as airlines and shipping operators faced disruption during the initial phase of the conflict. Manufacturing contracted 8.1 per cent, reflecting both lower energy-linked output and pressure on supply chains.

The National Planning Council said regional conditions had affected trade routes, raised transport and insurance costs and intensified pressure on supply chains. It said government entities coordinated measures to maintain supplies of essential goods and services, support businesses and consumers and preserve market stability while external disruptions continued.

Abdulaziz bin Nasser bin Mubarak Al Khalifa, secretary-general of the National Planning Council, said the performance of the non-hydrocarbon economy reflected the strength of Qatar’s institutions, fiscal management and strategic investment despite geopolitical pressure. He said those factors had helped maintain stability and allowed the country to continue pursuing its development objectives.

Investment figures showed inward foreign direct investment positions rose 3.3 per cent from the previous quarter to 172.2 billion riyals at the end of March, while outward positions increased 3.5 per cent to 221.7 billion riyals, providing a measure of activity outside hydrocarbons.

The energy disruption has also sharply reduced Qatar’s LNG exports, a crucial source of state revenue and foreign earnings. Before the conflict, the country supplied about one-fifth of daily global LNG, giving disruptions at its production and export facilities consequences well beyond the domestic economy.