How Qatar can forge a new path to resilience and a stronger economy post-regional conflict

The war between the United States, Israel and Iran that began in February has served as a significant test for the economy of Qatar, which has been dragged into the conflict. A new whitepaper from KPMG explores how organizations and economies can move beyond immediate recovery to build adaptive, stronger and future-ready systems.

While previous challenges like the 2017 blockade and the Covid-19 pandemic helped build a foundation for recovery, the scale of recent events – including missile strikes on Ras Laffan Industrial City and the closure of the Strait of Hormuz – has necessitated a more systemic approach to national security and economic stability.

The KPMG whitepaper suggests that simply returning to previous operations will not be sufficient. Instead, the nation must transform these disruptions into strategic advantages by embedding resilience into the core of every major sector.

Building stability in a difficult region

Overall, the financial landscape in Qatar has demonstrated a steady trajectory toward stability despite recent regional volatility. One significant indicator of this resilience is the notable improvement in the public debt position of the country.

By the end of 2025, public debt had decreased to 40% of the gross domestic product, down from 45% at the end of 2023. This reduction reflects a disciplined approach to fiscal management and a commitment to long-term economic health. The banking sector remains robust, supported by a diverse and deep pool of funding sources.

Combined deposits from the public and private sectors accounted for more than 70% of total deposits within the banking industry as of the 2025 fiscal year. Such a high concentration of local deposits provides a reliable buffer for financial institutions, ensuring they remain well-capitalized to support future growth initiatives.

Economic shocks and infrastructure damage

The impact of the conflict has been felt most acutely in the energy sector, which traditionally contributes between 35% and 40% of the nominal gross domestic product. The Iranian attacks on the Ras Laffan facility damaged 17% of the liquefied natural gas export capacity, resulting in an estimated $20 billion loss in annual export revenue.

Furthermore, vessel traffic through the Strait of Hormuz dropped by 86%, while air freight costs increased by up to 80%. These pressures have put over $50 billion in infrastructure projects at risk of delay, forcing Qatar to prioritize strategic and resilient developments.

With the renewed explosion of conflict, Qatar has been left in a difficult position: The nation has attempted to bridge the gaps between the various opposing factions in the region, even holding negotiations between Hamas officials and Israel in recent years. But walking this tightrope has proven treacherous.

Qatar’s willingness to ally itself with the U.S. has backfired as Iran targets its Gulf neighbors, which it sees as complicit in the attacks on their country. Because of U.S. military bases in their territory, the Qatari claim to neutrality has not convinced Iran’s leaders.

Strategic shifts in trade and technology

Despite the various challenges Qatar faces, many sectors have demonstrated remarkable absorption capacity. The wholesale and retail industry, which invested heavily in resilience after 2017, remained one of the least disrupted areas.

To further protect supply chains, there is currently a push to formalize alternative routing through land corridors like Abu Samra and maritime gateways in Oman and the UAE. The aim is to avoid the reach of Iranian missiles and drones, which mainly impede maritime traffic in the Persian Gulf.

The conflict has also accelerated the adoption of digital tools by many companies. Business-to-business e-commerce is growing at a rate of 10.37%, and the use of AI in demand forecasting is helping retailers maintain operations even when traditional logistics are strained.

Consumer spending in Qatar tends to rebound quickly once safety and normalcy returns. Pent-up demand is typically strongest in luxury, hospitality, and experiential retail. Qatar is well positioned to capture this rebound due to its world-class retail infrastructure and its potential role in post-conflict diplomatic events and conferences.

When the Strait of Hormuz is blocked, Hamad Port is blocked with it. No port opportunity exists while Hormuz remains disrupted – but there are certainly opportunities after the conflict resolves.

Taking inspiration from India’s China+1 strategy play book that emerged from manufacturers’ realization that concentrating all production in a single country can create catastrophic exposure to disruption, Qatar can apply the same strategy to emerge as a leading trade and logistics hub. It can leverage Hamad Port’s demonstrated operational continuity and integrate various free trade zones, the whitepaper notes.

Opportunities for long-term growth

The path forward involves a transition from defensive measures to a proactive, adaptive economy. Experts identify significant opportunities in post-war reconstruction, where the robust industrial base of Qatar in aluminum and petrochemicals can support regional rebuilding efforts.

There is also a strategic focus on diversifying the energy mix to include hydrogen and renewable energy, reducing the structural vulnerability of relying on a single export route. By leveraging its experience in crisis management, the nation aims to reposition itself as a reliable global hub and a leader in energy security diplomacy.

“For Qatar, the next pivot would be transitioning from reactive crisis management to proactive system redesign, embedding redundancy, localization, and digitalization as permanent features of the sector,” said Venkat Krishnaswamy, partner and Head of Advisory at KPMG in Qatar.

Financial and tourism sectors

To support businesses during this transition, the government has activated state-backed credit guarantees and emergency credit lines for affected companies. The financial sector is also looking to expand digital payments and cross-border settlements to ensure continuity.

In the tourism and hospitality sector, which faced a $600 million daily loss in regional revenue during the height of the conflict, a focus on medical and business tourism is expected to drive a strong rebound. By introducing rescheduling guarantees and temporary fee waivers, the industry is working to restore international confidence and secure future bookings.

“Over the past decade, Qatar’s tourism and hospitality sector has undergone a profound transformation driven not only by ambitious national development strategies, but also by a series of significant geopolitical and global disruptions,” said Krishnaswamy.

“Rather than hindering progress, these challenges have acted as catalysts for policy reform, market diversification, infrastructure development, and global positioning. The sector has evolved from a regionally dependent tourism model into a globally competitive, experience-driven destination anchored in events, connectivity, and innovation.”