QNB Analyzes Economic Impact of US 3-3-3 Plan Amid Challenges

Doha, Qatar: Qatar National Bank (QNB) has released an analysis of the initial outcomes of the 3-3-3 economic plan, launched by the US administration a year ago. The report highlights signs of better-than-expected economic growth, alongside ongoing challenges in managing public finances and notable advancements in the energy sector.

The bank’s weekly report emphasizes that the US economy has demonstrated remarkable resilience, primarily due to monetary easing and the onset of an investment cycle fueled by artificial intelligence (AI). Despite this, the most significant hurdle remains public finance management, while the energy sector is making strides through diversification and enhanced supply security rather than relying solely on traditional oil production.

Economic Growth and Fiscal Challenges

According to the report, the 3-3-3 plan aims to achieve a 3 percent economic growth rate, reduce the fiscal deficit to 3 percent of GDP, and increase domestic energy production by 3 million barrels per day by 2028. The analysis acknowledges that while the US economy faced a slowdown in 2025, the downturn proved less severe than anticipated, showcasing the resilience of the economic landscape.

Despite the adverse effects expected from high tariffs enacted after what has been termed Liberation Day, the actual impacts on growth and inflation have remained relatively contained. The report indicates that real growth stabilized at approximately 2 percent, slightly below historical averages but still positive. This stability can be attributed to several interrelated factors, including robust household consumption supported by solid balance sheets and rising asset prices, which mitigate the cumulative effects of inflation.

Furthermore, the shift in monetary policy from a restrictive to a neutral stance has led to reduced borrowing costs, contributing to improved financial conditions through late 2025.

Investment Cycle and Energy Sector Developments

A key highlight from QNB’s report is the emergence of a new investment cycle driven by AI. Major US companies are significantly increasing capital expenditures on data centers, semiconductors, and digital infrastructure, which bolsters the formation of productive capital. Although the full impact of these investments will take time to manifest, the trajectory suggests potential support for medium-term growth, keeping the 3 percent growth target attainable in the coming years.

In contrast, the report expresses disappointment regarding the fiscal objectives of the 3-3-3 plan. The goal of reducing the federal deficit to 3 percent of GDP has proven unrealistic in its first year. Persistent structural spending pressures, the extension of tax exemptions, and political constraints continue to hinder substantial fiscal consolidation efforts.

The establishment of the Department of Government Efficiency (DOGE), previously led by Elon Musk, was one of the administration’s key strategies aimed at reducing waste and enhancing spending efficiency. Nevertheless, despite some media attention and limited savings, the initiative’s impact has been marginal compared to the scale of the challenges presented by entitlement programs, defense spending, and debt servicing costs, which constitute the largest portions of the budget.

Official estimates and independent forecasts indicate that the federal deficit is expected to remain near 6.2 percent of GDP in 2026, with only slight reductions projected over the medium term. These figures underline the difficulty of reconciling tax cuts with stringent fiscal discipline in the current US political climate, compounded by insufficient tariff revenues to bridge the budgetary gap.

On the energy front, while the target of increasing crude oil production by 3 million barrels per day has not yet been met, US energy output continues to rise through a more diverse mix of sources. Constraints such as capital discipline, maturing oil basins, labor shortages, and escalating costs have tempered the potential for rapid expansion in crude oil production.

Conversely, the US energy sector has seen significant growth when evaluated in terms of total petroleum liquids and barrels of oil equivalent, with natural gas production also on the rise. A more neutral regulatory approach towards oil and gas has alleviated uncertainties, fostering gradual investment, while the expansion of renewable energy sources remains driven by their economic viability.