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•    Newly expanded terminal caters to 58mn passengers annually     Hamad International Airport (HIA) ‘Phase A’ expansion will cater to 58mn passengers annually, Qatar Airways Group Chief Executive HE Akbar al-Baker said on Thursday. He noted that ‘Phase B’ of expansion, which is set to commence in early 2023 will further increase capacity to more than 70mn passengers annually. The newly expanded terminal encompassed a total of nine projects, which includes Central Concourse-(The Orchard, retail & F&B, Oryx Garden Hotel and North Plaza Lounges, Al Mourjan Business Lounge, Remote Transfer Baggage Facility (RTBF) building and system, Virtual Air Traffic Control Tower, Western Taxiway and Stand Development works, Western Fuel Farm and Midfield Fuel Farm expansion works and Cargo Bridging. With sustainability at the core of HIA’s plans, the airport has managed to have four of the expansion projects achieve a 4-star rating under the Global Sustainability Assessment System (GSAS) from Gulf Organisation for Research & Development (GORD). This includes the Orchard, Oryx Garden Hotel & north plaza lounges, Al Mourjan Business lounge- the Garden and the Remote Transfer Baggage Facility. HIA Phase B expansion will increase capacity to more than 70mn passengers and include new concourses and cargo terminal. New Concourses: a 95,000sqm plus extension of Concourses D & E to fulfill the final expansion of the passenger terminal connecting to the Orchard and converting adjacent remote aircraft stands to contact gates. A new western Satellite Concourse of approximately 300,000 square meters converting the 34 remote aircraft stands to contact gates with an automated people mover connection to automated people mover connection to passenger terminal. New Cargo Terminal 2 (CT2) will be a dedicated transfer cargo facility designed to handle 3.3mn tonnes per annum. It will be located on a 300,000m2 plot beside the existing Cargo Terminal in the HIA Midfield Area with a built up area of circa 240,000m2 divided over three material handling floors and four office floors. Ends    

S&P estimates a 55% year-on-year rise in Qatar’s hydrocarbon revenue in 2022, with non-hydrocarbon revenue also buoyed by the additional economic activity associated with the World Cup and recovery after the Covid-19 pandemic. High oil prices should result in strong government surpluses in 2022-2023, at about 13% of GDP in 2022 and 6% in 2023. The general government balance includes the central government's budgetary position, and small deficits of about 0.2% of GDP at the social security system level. In the first six months of 2022, the fiscal surplus was recorded at QR47bn, compared with a budgeted deficit of QR8.3bn for the year, S&P said in its ratings upgrade report. On November 4, S&P Global Ratings raised its long-term foreign and local currency sovereign credit ratings on Qatar to 'AA' from 'AA-' and affirmed its short-term foreign and local currency sovereign credit ratings at 'A-1+'. The outlook is stable. As S&P oil price estimates fall to $55/b, it expects a deficit of about 4% of GDP on average in 2024-2025. “We expect government revenue to continue to be largely driven by gas production and oil prices. We also expect government expenditure to remain broadly flat, at about 30% of GDP over 2022-2025. During the four years to 2019, expenditure averaged about 35% of GDP. “Our expectation of additional expenditure restraint over the forecast period through 2025 largely relates to our assumption that government spending on capital projects of about 10% of GDP in 2022 will decline to about 7% of GDP by 2025, given that many large infrastructure projects will have been completed, such as Doha's new metro and tram system.” According to S&P the government intends to reduce its overall debt-to-GDP ratio and to rebalance the share of foreign currency debt in the total, aiming for 50%, down from 58% in 2021. “We expect the government's debt-repayment strategy to reduce total general government debt to 27% of GDP by 2025, from 49% in 2022. “The government will repay the debt from cash surpluses partly accumulated from past Eurobond issuance. The government's net asset position will remain a rating strength, averaging 110% of GDP over 2022-2025.”

Beyond the Tarmac Air cargo demand has softened and declined in the recent months due to multiple headwinds around the world. High inflation levels and the increasing fear of an economic recession have had a negative impact on the global flows of goods and services. In addition, the ongoing war in Ukraine still affects cargo capacity, with a number of important air cargo carriers directly impacted. As most of the world’s regions recover from the pandemic, post-pandemic consumer spending habits are likely to lean towards vacation travel more than home shopping via e-commerce, International Air Transport Association (IATA) said in a recent report. The most recent data on global goods trade show that trade maintained a similar year-on-year (y-o-y) growth rate at 5.2% in September. This stable trade performance is a positive signal to the world economy. Any easing of Covid-19 restrictions in China including factory reopening will support the global trade recovery. However, most of the uptake in trade since this year has benefited maritime, which has been growing in line with the global trade. Air cargo growth slightly narrowed the gap, with a one percentage point increase in its relative performance compared with the previous month. The Purchasing Managers' Index (PMI) of new export orders – historically a leading indicator for air cargo shipments – remained below the critical 50 line, suggesting continued contractions across the board. The shrinking in international export demand extended into September for US, Japan and South Korea, IATA noted. Meanwhile, China contracted for a third month in a row, signalling the impact of the country’s Covid-related restrictions on air cargo activities. Regarding Germany, the PMI decreased for the 7th consecutive month since March, marking the largest contraction since mid-2020. The global PMI contracted for a third month in a row to its lowest level in two years, weighing upon outlook for air cargo demand in the near future. Global demand, measured in cargo tonne-kilometres (CTKs), fell 10.6% compared to September 2021 (-10.6% also for international operations), but continued to track at near pre-pandemic levels (-3.6%). Capacity was 2.4% above September 2021 (+5.0% for international operations) but still 7.4% below September 2019 levels (-8.1% for international operations. Year-on-year inflation, as measured by the Consumer Price Index (CPI) for the G7 countries was 7.7% in September, a 0.2 percentage point (ppt) increase from the August level, remaining at a decade high level. Inflation in producer (input) prices, however, continued to slow down for a second month, to 13.7% in August. Oil is an important contributor to producer prices, and a major cost to airlines directly. The Brent crude oil price decreased further in September and continues to stabilise at a level of around $88.2 per barrel. The jet crack spread remains unusually wide at around $42 per barrel, though it has come off its high of $64 per barrel set in June. Middle Eastern carriers experienced a 15.8% year-on-year decrease in cargo volumes in September 2022. This was the worst performance of all regions and a significant decline compared to the previous month (-11.3%). Stagnant cargo volumes to/from Europe impacted the region’s performance. Capacity was down 2.8% compared to September 2021. And Asia-Pacific airlines saw their air cargo volumes decrease by 10.7% in September 2022 compared to the same month in 2021. This was a decline in performance compared to August (-8.3%). Airlines in the region continue to be impacted by the conflict in Ukraine, labour shortages, and lower levels of trade and manufacturing activity due to Omicron-related restrictions in China. Available capacity in the region increased by 2.8% compared to 2021. “While air cargo’s activity continues to track near to 2019 levels, volumes remain below 2021’s exceptional performance as the industry faces some headwinds,” points out Willie Walsh, IATA’s Director General. At the consumer level, he noted that with travel restrictions lifting post-pandemic, people are likely to spend more on vacation travel and less on e-commerce. And at the macro-level, increasing recession warnings are likely to have a negative impact on the global flows of goods and services, balanced slightly by a stabilisation of oil prices. “Against this backdrop, air cargo is bearing up well. And a strategic slow-down in capacity growth from 6.3% in August to 2.4% in September demonstrates the flexibility the industry has in adjusting to economic developments,” Walsh said.

Oil market may remain tight even as oil demand softens amid weaker global economic activity and uncertainties, National Bank of Kuwait (NBK) has said in a report. Oil prices recovered in October, boosted by the Opec+ decision to cut production by 2mn barrels per day for 14 months effective November. Opec+’s announcement has helped put a floor on prices and, in tandem with expected supply shortfalls and moderate supply gains from Russia and non-Opec countries including the US, respectively, the market should remain tight even as oil demand softens amid weaker global economic activity, it said. International benchmark Brent crude ended the month trading at $94.8/barrel, posting a first monthly gain, of 7.8% month-on-month, in five months. US crude marker West Texas Intermediate closed the month up almost 9% at $86.5. October’s oil price recovery occurred despite concerns about the health of the global economy amid aggressive central bank monetary tightening, surging consumer prices, the destabilising conflict in Ukraine and relatively weak Chinese economic activity, NBK said. The latter has been aggravated by repeated Covid-19 mobility restrictions and a property sector downturn. The International Monetary Fund‘s (IMF) October World Economic Outlook forecast that world GDP growth would slow from 3.2% this year to a downwardly revised 2.7% in 2023. There is a 25% chance that year-ahead growth could drop below 2%. “The outlook for the oil market is mired in uncertainty,” NBK said and noted while oil demand is softening in line with weakening global economic growth, it is the supply side that has the greatest potential to spring surprises. The impending EU oil embargo on Russian seaborne crude and refined products could lead to the shutting-in of substantial volumes of Russian supply — even after barrels are diverted at a heavy discount to Russia’s largest customers China, India and Turkiye. In tandem with Opec+ supply cuts, the market is expected to tighten in 2023, with stock draws expected from mid-2023 onwards. The IEA sees the ‘call on Opec’ in 2023 higher than the group’s likely production during the year, especially in the absence of higher Iranian or Venezuelan supply. “We expect risks to oil prices to be on the upside,” NBK added.

Qatari banks external debt is expected to drop by 8% this year, S&P said and noted there may be a broad stabilisation over the next couple of years. This, S&P said will be due to many factors including high oil prices that should result in stronger domestic deposit growth than was seen over the past few years. S&P also expects Qatari banks financing needs to ease as several large infrastructure projects are delivered. New central bank rules, it said have increased reserve requirements for short-term non-resident deposits and the weight of non-resident deposits in the calculation of bank's liquidity coverage and the net stable funding ratios, which will deter banks from using external sources to grow their balance sheets further. According to S&P, risks related to Qatar's high level of non-resident deposits previously materialised in 2017, when $22bn - the equivalent of 14% of 2017 GDP and about 20% of total external liabilities - left the Qatari banking system after a group of Arab and African states imposed a blockade on Qatar. “We understand that most of the deposits were withdrawn when they matured, and that around one-third of them related to the boycotting nations. The authorities - mostly the QIA - compensated the Qatari banks by providing about double the amount of funds that had left the system, namely, $43bn, or 27% of 2017 GDP,” S&P noted. Beyond the risks stemming from banks' short-term external funding profiles, the financial system coped well with the pandemic and the subsequent withdrawal of forbearance measures. “We expect credit losses will remain elevated in 2022, at around double their pre-pandemic rates of 50 basis points (bps). Rising interest rates should support profitability and bolster already strong levels of capitalisation.” Like other countries, inflation has increased in Qatar and S&P expects the consumer price index to increase by 5.5% on average in 2022. Amid rising inflation, the QCB increased the repurchase rate by 300 bps since the beginning of the year to 4% following the rate hikes by the US Federal Reserve. S&P anticipates an acceleration in GDP growth this year as non-hydrocarbon sectors such as tourism, transport, and construction benefit from Qatar's hosting of the FIFA World Cup, which is expected to bring in about 1.2mn tourists. Economic growth thereafter is likely to be relatively soft through 2025. Government investment, much of which is outside the hydrocarbon sector, will gradually decline, with major infrastructure projects nearing completion. S&P forecasts that GDP growth will accelerate toward 5% in 2022 as Qatar hosts the FIFA World Cup, before moderating toward 2% in 2023-2025. Qatar's ambitious plans to increase LNG capacity should boost GDP growth over 2026-2027, after which growth should moderate with production plateauing at the new higher level beyond 2027. “We do not expect significant policy shifts over the forecast period through 2025, and we expect improved regional co-operation to continue,” S&P said. S&P recently raised its long-term sovereign credit rating on Qatar to 'AA' from 'AA-', assigned a stable outlook, and affirmed the country’s 'A-1+' short-term rating.

* High oil prices will support Qatar’s strong fiscal and external balances in 2022-2023, ratings agency said in a report High oil prices will support Qatar’s strong fiscal and external balances in 2022-2023, S&P Global said as the ratings agency expects a general government surplus of about 13% of GDP in this year, driven by a sharp increase in revenue. S&P noted that Qatar's current account will remain in a very strong surplus in 2022-2023, supported by higher prices for its gas exports. The current account and fiscal deficit, it said will weaken over 2024-2025 because it assumes oil prices will decline to $55 per barrel. “We expect lesser reliance on short-term banking sector external funding will help reduce the country's external liquidity needs somewhat,” S&P said. Qatar derives about 40% of its GDP, 80% of government revenue, and 90% of exports from the hydrocarbon sector. This makes the country's credit profile vulnerable to volatility in oil prices, to which most of its long-term gas contracts are linked. S&P forecasts are based on the expectation that the Brent oil price will average just above $100/b for 2022, $85/b for 2023, and $55/b for 2024 and thereafter. According to the ratings agency, high oil prices should result in strong government surpluses in 2022-2023, at about 13% of GDP in 2022 and 6% in 2023. The general government balance includes the central government's budgetary position, and small deficits of about 0.2% of GDP at the social security system level. In the first six months of 2022, the fiscal surplus was recorded at QR47bn, compared with a budgeted deficit of QR8.3bn for the year. “We estimate a 55% year-on-year rise in hydrocarbon revenue in 2022, with non-hydrocarbon revenue also buoyed by the additional economic activity associated with the World Cup and recovery after the Covid-19 pandemic. As S&P oil price estimates fall to $55/b, it expects a deficit of about 4% of GDP on average in 2024-2025. The implementation of value-added tax is a possibility during 2023-2024, but may be delayed amid current inflationary pressures. “We expect government revenue to continue to be largely driven by gas production and oil prices. We also expect government expenditure to remain broadly flat, at about 30% of GDP over 2022-2025.” During the four years to 2019, expenditure averaged about 35% of GDP. S&P expectation of additional expenditure restraint over the forecast period through 2025 largely relates to its assumption that government spending on capital projects of about 10% of GDP in 2022 will decline to about 7% of GDP by 2025, given that many large infrastructure projects will have been completed, such as Doha's new metro and tram system. The government intends to reduce its overall debt-to-GDP ratio and to rebalance the share of foreign currency debt in the total, aiming for 50%, down from 58% in 2021. “We expect the government's debt-repayment strategy to reduce total general government debt to 27% of GDP by 2025, from 49% in 2022. The government will repay the debt from cash surpluses partly accumulated from past Eurobond issuance. The government's net asset position will remain a rating strength, averaging 110% of GDP over 2022-2025,” S&P said. S&P projects that the current account will maintain a surplus of 23% of GDP on average over 2022-2023, before moderating to about 3% of GDP over 2024-2025, in line with its oil price assumptions. The high level of assets accumulated within the sovereign wealth fund, the QIA, will continue to support Qatar's strong external position. “We estimate that, on average, Qatar's external liquid assets will surpass external debt by about 80% of current account payments in 2022-2025,” S& P said.

* Qatar's revenue stream will be significantly enhanced by North Field expansion, whereby Qatari liquefied natural gas production capacity is expected to increase by 64% As a low-cost LNG supplier, Qatar will remain in a “relatively strong competitive position” even after 2030, although demand is likely to peak in the mid-2030s, with increasing use of renewables in the energy market having a gradual impact on demand for hydrocarbons, S&P Global noted in its ratings upgrade. S&P recently raised its long-term sovereign credit rating on Qatar to 'AA' from 'AA-', assigned a stable outlook, and affirmed the country’s 'A-1+' short-term rating. In its overview, S&P noted Qatar's debt interest costs as a share of government revenue have fallen, and therefore it expects them to remain low because the government is repaying maturing debt. Additionally, the government's revenue stream will be significantly enhanced by the North Field expansion, whereby Qatari liquefied natural gas production capacity is expected to increase by 64% (by 2027). “The upgrade reflects structural improvements in the Qatari government's fiscal position. The government's strategy of paying off maturing debt, will sustainably reduce debt-servicing costs to below 5% of general government revenue over 2022-2025,” S&P said. Higher gas production related to the North Field expansion, expected to come onstream from end-2025, should further increase Qatari government revenue. Qatar remains one of the largest exporters of LNG globally. Between 2025 and 2027, the government plans to increase its LNG production capacity by about 64%, from 77mn tonnes per year to 126mn tpy. The strategic pivot away from Russian gas, particularly by European economies, suggests there will be a ready market for the additional Qatari gas. In its forecast, S&P said, “We assume that LNG production levels will be largely flat until 2025, but increase by about 30% over 2026-2027, on the assumption that the full increase in capacity will take some time to be fully utilised." S&P said it expects "strong" non-hydrocarbon sector growth as Qatar hosts the FIFA World Cup from November 20 to December 18, which will support an economic expansion of about 5% in 2022. After the tournament, S&P has forecast real GDP growth will average about 2.5% over 2023-2025 as gas production levels remain broadly stable and non-hydrocarbon sector growth normalises around 4%. The country's strong general government net asset position remains a credit strength and it expects it to increase over the period to 2025, supported by investment returns on Qatar's sovereign wealth fund, Qatar Investment Authority (QIA), assets, and the government's repayment of maturing external debt. Averaging about 150% of GDP in 2022-2025, Qatar Government's large liquid assets provide it with a strong buffer to mitigate the economic effects of external or financial shocks.

Qatar’s inflation will moderate to 2.1% in 2023 from 4.3% this year, researcher Oxford Economics has said in a report. The country’s fiscal balance has been forecast at 9% of GDP this year and 9.3% in 2023 by Oxford Economics. The country’s current account surplus, according to Oxford Economics will be 16.8% of its GDP this year and 14.9% in 2023. Qatar’s real GDP growth has been forecast at 3.6% this year and 3.5% in 2023. GCC central banks hike rates are in line with the US Fed, Oxford Economics said an noted the US Fed hiked its policy rate by 75bps (0.75%) at its latest Federal Open Market Committee (FOMC) meeting. The GCC central banks quickly followed suit – Saudi Arabia, the UAE, Oman, and Bahrain mirrored the rate hike, and their policy rates now stand at 4.5%, 3.9%, 4.5%, and 4.75%, respectively. Qatar has increased their deposit and repo rates by 75bps and lending rate by 50 bps. Higher interest rates will increase borrowing costs, albeit at a slower pace. “GCC countries could see a cumulative increase in interest rates of 425bps in 2022, which will likely weigh on the non-oil GDP of the region. We expect growth in non-oil GDP in the GCC region to be 4.9% in 2022 and then ease to 3.4% in 2023,” Oxford Economics said. In an earlier report, Emirates NBD noted inflation in Qatar has slowed this year but remains high relative to other GCC countries at 4.8% year-on-year (y-o-y) in August. Housing and food inflation has accelerated in recent months but has been offset by lower healthcare and transport costs. Recreation and culture prices have risen sharply however as the sector rebounds from pandemic-era deflation. However, we do expect annual inflation to slow to under 4% by year end, bringing average CPI to 4.5% this year, up from 2.3% in 2021. Money supply growth has accelerated to 12.4% y-o-y in August, the fastest growth since 2018, largely on the back of increased FX deposits. Private sector credit growth has slowed to 6.6% y-o-y in August from a peak of 9.7% y-o-y in February this year. Government and public sector credit growth has declined on an annual basis after double digit growth in 2021, falling to -13.6% y-o-y in August. Qatar’s budget has benefitted from the surge in oil and natural gas prices this year, with oil and gas revenues up 67% y-o-y in H1, 2022. Other revenues have also increased sharply this year, with top line revenue up 58% y-o-y in H1. Expenditure growth has been more restrained at 13% y/y, focused on capital spending projects. Current spending and wages and salaries have increased 11-12% y-o-y in H1, 2022. “We expect the budget surplus to widen to over 10% of GDP this year, rising slightly to 12% of GDP in 2023 on the assumption that oil and gas prices will remain high,” Emirates NBD said.

Beyond the Tarmac As air travel is fast returning to normal, post-pandemic, passengers seem to want improved convenience throughout their trip. They clearly see technology as key to improving the convenience of airport processes. Passengers seek convenience when they plan their travel and when choosing where to depart from. Their preference is to fly from an airport close to home, have all booking options and services available in one single place, pay with their preferred payment method and easily offset their carbon emissions, a recent survey by the International Air Transport Association (IATA) reveals. Obviously, travel during Covid-19 was complex, cumbersome and time consuming due to government-imposed travel requirements worldwide. The devastation that pandemic caused on countless industries was apparent from demand destruction, company closures, revenue and job losses around the world. The aviation industry was one of the hardest hit. During Covid-19, an estimated 95% of the population was told to stay home, and avoid unnecessary trips. That meant almost nobody flew! Passengers want convenience when they plan their travel and when choosing where to depart from. Their preference is to fly from an airport close to home, have all booking options and services available in one single place, pay with their preferred payment method and easily offset their carbon emissions, IATA noted. Proximity to the airport was passengers’ main priority when choosing where to fly from, according to 75% of survey respondents. This was more important than ticket price (39%). Travellers were satisfied being able to pay with their preferred payment method which was available for 82% of travellers. Having access to planning and booking information in one single place was identified as being top priority. 18% of passengers said that they offset their carbon emissions, the main reason given by those that did not was not being aware of the option (36%). “Today’s travellers expect the same online experience as they get from major retailers like Amazon. Airline retailing is driving the response to these needs. It enables airlines to present their full offer to travellers. “And that puts the passenger in control of their travel experience with the ability to choose the travel options that they want with convenient payment options,” said Mohamed Albakri, IATA senior vice-president (Financial Settlement and Distribution Services). In terms of travel facilitation, most travellers are willing to share their immigration information for more convenient processing. Some 37% of travellers said they have been discouraged from travelling to a particular destination because of the immigration requirements. Process complexity was highlighted as the main deterrent by 65% of travellers, 12% cited costs and 8% time. Where visas are required, 66% of travellers want to obtain a visa online prior to travel, 20% prefer to go to the consulate or embassy and 14% at the airport. Some 83% of travellers said they would share their immigration information to speed up the airport arrival process. While this is high, it is slightly down from the 88% recorded in 2021. Nick Careen, IATA’s senior vice president (Operations, Safety and Security) said: “Travellers have told us that barriers to travel remain. Countries with complex visa procedures are losing the economic benefits that these travellers bring. Where countries have removed visa requirements, tourism and travel economies have thrived. “And for countries requiring certain categories of travellers to get visas, taking advantage of traveller willingness to use online processes and share information in advance would be a win-win solution.” With regard to airport processes, the survey noted that passengers are willing to take advantage of technology and re-thought processes to improve the convenience of their airport experience and manage their baggage. Passengers are willing to complete processing elements off-airport. 44% of travellers identified check-in as their top pick for off-airport processing. Immigration procedures were the second most popular “top-pick” at 32%, followed by baggage. And 93% of passengers are interested in a special program for trusted travellers (background checks) to expedite security screening. Passengers are interested in more options for baggage handling. 67% would be interested in home pick-up and delivery and 73% in remote check-in options. 80% of passengers said that would be more likely to check a bag if they could monitor it throughout the journey. And 50% said that they have used or would be interested in using an electronic bag tag. Passengers also see value in biometric identification, the survey reveals. Some 75% of passengers want to use biometric data instead of passports and boarding passes. Over a third have already experienced using biometric identification in their travels, with an 88% satisfaction rate. But data protection remains a concern for about half of travellers. “Passengers clearly see technology as key to improving the convenience of airport processes. They want to arrive at the airport ready-to-fly, get through the airport at both ends of their journey more quickly using biometrics and know where their baggage is at all times. “The technology exists to support this ideal experience. But we need cooperation across the value chain and with governments to make it happen. And we need to continuously reassure passengers that the data needed to support such an experience will be safely kept,” noted Careen.

Total assets of Qatar banking sector increased by 0.4% month-on-month (MoM) by 0.4% this year up to September to reach QR1.835tn, QNB Financial Services (QNBFS) has said in a report. The sector’s total loan book declined by 0.4% MoM (-0.2% in 2022) in September to QR1,213.6bn and deposits went down by 0.8% MoM (-0.9% in 2022) in the same month to QR965.1bn. Loans decrease in September was mainly due to a drop by 2.1% from the public sector. Deposits decline that month was due to a contraction both in non-resident and public sector deposits, QNBFS noted. The public sector mainly caused the credit decline (down 2.1% MoM in September). As deposits moved down by 0.8% in September, the loans to deposits ratio (LDR) rose to 125.8% compared with 125.2% in August. Domestic public sector loans moved lower by 2.1% MoM (-6.5% in 2022) in September. The government segment (represents nearly 31% of public sector loans) fell by 6.8% MoM (-23.7% in 2022), while the semi-government institutions’ segment dropped by 7.6% MoM (+2.2% in 2022). However, the government institutions’ segment (represents nearly 64% of public sector loans) loan book increased by 0.8% MoM (+3.9% in 2022). Total private sector loans moved up by 0.5% MoM (+3.7% in 2022) in September. The services segment and real estate mainly contributed toward the private sector loan growth for September. Services (contributes nearly 29% to private sector loans) increased by 0.7% MoM (+5.4% in 2022). The real estate segment (contributes nearly 21% to private sector loans) went up by 0.7% MoM (+5.7% in 2022). General trade (contributes nearly 21% to private sector loans) gained 0.5% MoM (+1.1% in 2022), while consumption and others (contributes nearly 22% to private sector loans) moved down marginally by 0.01% MoM (+4.5% in 2022) during September. Outside Qatar loans went down by 1.8% MoM (-8.9% in 2022) during September. Public sector deposits declined by 1.3% MoM (+12.5% in 2022) for September, resulting in the overall drop in the Qatar banking sector deposits. Looking at segment details, the government segment (represents nearly 27% of public sector deposits) fell by 15.1% MoM (-13.5% in 2022). However, the government institutions’ segment (represents nearly 58% of public sector deposits) moved up by 5.1% MoM (+23.7% in 2022), while the semi-government institutions’ segment went up by 4.0% MoM (+37.1% in 2022). Private sector deposits increased by 0.5% MoM (+7.9% in 2022), QNBFS said. On the private sector front, companies and institutions’ segment went up by 1.0% MoM (+14.4% in 2022), while the consumer segment rose marginally by 0.01% MoM (+2.4% in 2022). However, non-resident deposits continued its downward spiral and went down by 2.8% MoM (-27.4% in 2022) in September 2022, QNBFS noted. An analyst told Gulf Times that “both the drops relate directly to the government.” “On the Loans side we can see that government overdrafts have come down, which could mean they stopped using short-term funding. On the deposits side again it could be that government is drawing down on its deposits to make payments related to 2022 FIFA World Cup. I think either way the government has a lot of flexibility in funding,” the analyst added.

Commercial Bank has opened a new state-of-the-art branch at Hamad Port. This strategic location plays an instrumental part in the vision of the State of Qatar, and Commercial Bank plays its part in serving the community and businesses that thrive off this development. Commercial Bank Board Members officially opened the new branch at a ceremony attended by key dignitaries, and top executives including Group CEO Joseph Abraham. Commenting on the new branch opening, Abraham said: “Commercial Bank continues to maintain one of the largest branch networks in the country. Our new branch at Hamad Port further reinforces our long-term commitment and expertise in international trade and will support increasing trade between Qatar and the rest of the world, as well as the wider Qatar National Vision”. The new CB branch will provide the customers with a wide range of services. Shahnawaz Rashid, executive general manager and head (Retail Banking), said: “We look to make banking easier for our customers which can mean serving them digitally with speed and reliability or by meeting them in person to assist with complicated transactions and advice. Both we aim to do seamlessly. “The new Hamad Port branch comes as an important step forward in our plan to make banking services widely available for our customers. This new branch will provide both retail and corporate customers with a full range of services to ensure that our benefits reach customers in our society”. Commenting on the new branch opening, Nayef al-Beshri, assistant general manager and head (Branch Network), said: “Commercial Bank has maintained its leadership position through its presence in the most strategic locations across Qatar. The new Hamad Port branch represents a key addition to the Commercial Bank’s expansionary network plan, which is based on targeting the important sectors, of which the transportation sector is one of the most important. “Today, under the umbrella of Mawani Qatar, we aspire to be an effective link between importers, exporters, shipping companies and customs clearance from our customers by providing a full range of services and unique features that meet their banking needs. “This new branch will provide unique banking services to our individual and corporate customers as well as the latest and largest digital banking lobby that will allow our customers to benefit from the 24x7 self-service machines. We look forward to providing more innovative services through a distinctive and modern branch network”. Commercial Bank said it continues to expand its wide branch network to enhance its leading position among the financial institutions in Qatar.

North Field expansion and many other economic diversification projects will drive the national economy beyond 2022, noted Commercial Bank Group CEO Joseph Abraham. The North Field expansion, construction on both the offshore and the onshore components, will provide a boost to the economy, Abraham said in an interview with Gulf Times Monday. He noted Google Cloud has opened its first data centre in the Middle East in Qatar. “I think this shows the diversification of the economy and the continuing international links that Qatar will be expanding,” Abraham noted. He also highlighted Qatar’s emergence as a major international sporting centre. Qatar is hosting the world’s largest sporting event - the 2022 FIFA World Cup from November 20 to December 18. The 2023 Asian Cup football tournament will be held in Qatar. Qatar has also signed a deal to host Formula One from 2023. Asked whether the country’s real estate sector will be able to keep momentum, Abraham noted: “I think definitely. The country’s real estate sector has adjusted over the last few years. On residential, I think we are seeing an upside and many of the policy initiatives that the government has done like residency, will encourage further investments, particularly in the residential (segment). On Commercial Bank’s new branch opening at Hamad Port, the CEO said: “This shows our commitment to support Qatar National Vision 2030 and the country’s trading partners.” He said the Hamad Port branch will have the full capability to provide excellent service to all segments of Commercial Bank customers including retail. “We are grateful for the support we have received from Mwani Qatar and its CEO Captain Abdulla al-Khanji. “At Commercial Bank, our name says it all. We support trade, economic development. Hamad Port is the epitome of Qatar’s global linkages. Record volumes testify this. As Qatar is hosting the FIFA World Cup, we believe this is the opportune time to support Qatar National Vision 2030.” Abraham also said Commercial Bank would continue to open more branches across Qatar. “We are looking to open a branch in Lusail City next year,” he said.

Golden Pass is an export-oriented LNG project in the United States, which is expected to start production by end-2024, HE the Minister of State for Energy Affairs Saad bin Sherida al-Kaabi said Sunday. “Golden Pass will procure gas from the US market, liquefy and send it to the international markets,” HE al-Kaabi said in reply to a question by Gulf Times Sunday. QatarEnergy recently said the construction of Golden Pass, which has a total production capacity in excess of 18mn tonnes of LNG per year, is well underway with first LNG production expected by the end of 2024. The Golden Pass LNG Export Project is located in Sabine Pass, Texas. Affiliates of QatarEnergy and ExxonMobil recently agreed to independently offtake and market their respective proportionate equity shares of LNG produced by the Golden Pass LNG Project. Pursuant to the agreement, QatarEnergy Trading, a wholly owned subsidiary of QatarEnergy, will offtake, transport, and trade 70% of the LNG produced by Golden Pass LNG. As a result of this arrangement, Ocean LNG Limited, a joint venture established in 2016 between affiliates of QatarEnergy and ExxonMobil for offtaking and marketing the entire production of Golden Pass LNG, has ceased operations, and will be wound down.

*ConocoPhillips is third and final international partner in NFS expansion, which comprises two LNG mega trains with combined capacity of 16mn tonnes per year QatarEnergy has selected ConocoPhillips as its third and final international partner in the North Field South (NFS) expansion project, which comprises two LNG mega trains with a combined capacity of 16mn tonnes per year (MTPY). Pursuant to the agreement, ConocoPhillips will have an effective net participating interest of 6.25% in the NFS project, out of a 25% interest available for international partners. QatarEnergy will hold the remaining 75% interest. The partnership agreement was signed at the QatarEnergy headquarters yesterday by HE the Minister of State for Energy Affairs, Saad Sherida al-Kaabi, also the President and CEO of QatarEnergy, and Ryan Lance, Chairman and CEO of ConocoPhillips. Senior executives from both the companies attended the ceremony. At the signing ceremony al-Kaabi said, “QatarEnergy and its partners continue their efforts to supply an additional volume of about 65mn tonnes of LNG annually, from its North Field Expansion Projects and the Golden Pass LNG Project, to the global market to meet growing demand for cleaner, low-carbon energy, and to enhance energy security of customers around the world.” Al-Kaabi added, “As we have previously emphasised, LNG produced from the North Field Expansion Projects will have the lowest carbon emission levels in the world, thanks to the deployment of a number of technologies, including extensive use of carbon capture and sequestration technologies. This will enable our LNG to play an important role in supporting a pragmatic, equitable and realistic energy transition.” The minister welcomed ConocoPhillips to the NFS project and thanked the working teams at QatarEnergy and ConocoPhillips for their excellent work and cooperation that led to this agreement, and to the Qatargas leadership and project teams for their efforts in implementing the North Field Expansion Projects safely, and on schedule. “I would like to express our sincere gratitude to His Highness the Amir, Sheikh Tamim bin Hamad al-Thani, for his wise leadership and for his unwavering support to Qatar’s energy sector,” al-Kaabi added. The North Field Expansion Projects, comprising NFS and the North Field East (NFE) expansion projects, is the industry’s largest ever LNG project. It will start production in 2026 and will add more than 48mn tpy to the world’s LNG supplies, and raise Qatar’s LNG production capacity to 126 mn tpy. This unique project is characterised by the highest health, safety, and environmental standards, including carbon capture and sequestration, to reduce the project’s overall carbon footprint to the lowest levels possible.

* Country’s budget balance as a percentage of GDP has been forecast by the regional banking group at 10.4 this year and 12 in 2023 Qatar's nominal GDP has been forecast by Emirates NBD at $230.9bn this year and $244.1bn in 2023 while real GDP growth at 5.1% this year and 2.7% in 2023. The country’s budget balance as a percentage of GDP has been forecast by the regional banking group at 10.4 this year and 12 in 2023. Inflation based on CPI has been forecast at 4.5% this year and 2.5% in 2023. Qatar’s GDP grew 4.3% year-on-year (y-o-y) in H1 (first half) of 2022 underpinned by a sharp rebound in building and construction as the country prepares for to host the FIFA World Cup in November and December this year. Building and construction is the largest non-oil sector accounting for 13% of real GDP. The wholesale and retail trade sector posted double digit growth in Q2 (second quarter), while manufacturing output grew 6.2% y-o-y. However, financial and insurance services contracted -5.1% y-o-y in Q2 and -3.7% y-o-y in H1. Smaller sectors such as transport and storage, real estate activities and business services posted strong annual growth, contributing to the 9.7% y-o-y growth in non-oil GDP. Oil and gas GDP was much more modest at 1.2% y-o-y in Q2 but Emirates NBD expects this to accelerate in the second half of the year. The World Cup will likely keep business activity strong in Q4 but the pipeline of new work may continue to soften as borrowing costs rise and fewer new projects are launched. Money supply growth has accelerated to 12.4% y-o-y in August, the fastest growth since 2018, largely on the back of increased FX deposits. Private sector credit growth has slowed to 6.6% y-o-y in August from a peak of 9.7% y-o-y in February this year. Government and public sector credit growth has declined on an annual basis after double digit growth in 2021, falling to -13.6% y-o-y in August. Qatar’s budget has benefitted from the surge in oil and natural gas prices this year, with oil and gas revenues up 67% y-o-y in H1. Other revenues have also increased sharply this year, with top line revenue up 58% y-o-y in H1. Expenditure growth has been more restrained at 13% y-o-y, focused on capital spending projects. Current spending and wages and salaries have increased 11-12% y-o-y in H1. “We expect the budget surplus to widen to over 10% of GDP this year, rising slightly to 12% of GDP in 2023 on the assumption that oil and gas prices will remain high,” Emirates NBD noted.

Beyond the Tarmac While privatisation of SriLankan is high on the agenda of the new government in the island nation, the airline’s CEO says there is a strong future for the country’s national carrier supporting the growth of the Sri Lankan economy in general and tourism in particular. “We are open to the proposal for privatisation from the government,” Richard Nuttall, CEO, SriLankan Airlines told Gulf Times in an interview. Sri Lanka’s President Ranil Wickremesinghe earlier proposed to privatise SriLankan Airlines as part of reforms aimed at solving Sri Lanka’s worst ever financial crisis, which has led to political unrest in the island nation. “There are pros and cons to either form of ownership. We have been in dialogue with our ministry and the government over the different options for privatisation. We are now awaiting a final cabinet decision on the way forward,” Nuttall pointed out. Asked whether privatisation is the way to recover from SriLankan’s losses (the airline reportedly lost about $123mn in the fiscal year 2020-2021, and aggregate losses exceeded $1bn as of March 2021), the CEO said: “As with most airlines, we lost money during Covid-19. As such, the 2020/21 figures do not reflect future expectations. Over the last 12 months or so, the airline has been operationally profitable despite all the challenges in the country. “However, at a full profit and level, we are marginally negative. We have been affected by the fact that interest rates in Sri Lanka are now extremely high, and we are effectively paying interest on the losses of previous years. If we can use the privatisation to help us restructure or pay off some of these past debts, then we are in good shape to deliver a sustainable, profitable and growing airline to support the national economy.” Asked whether there will be any capital infusion as part of SriLankan’s restructuring plan, Nuttall said: “The airline has operated without any funding since early 2021 when we were still deep in the pandemic. We used this time to restructure costs and review our future network. In dollar terms, we have been operationally profitable for the first six months of the current financial year which started in April, and we are still hopeful of breaking even at a full profit and loss level for the year. “The challenges we have are around funding and growth. We still have outstanding debts from Covid times, and we have a number of engines in the shop for overhaul, and aircraft that are due to finish their leases. If we can privatise or find another source of funding, then we have an opportunity to grow. “We believe we should ideally be at least 50% bigger within three years to meet the needs of our current network and to deliver maximum efficiencies. If funding does not become available and we need to keep living of our cash flows as at present, then this future may take a little longer.” On SriLankan’s role in foreign exchange inflow into the island nation, as well as its role in bringing medical supplies for the country's ailing health sector, Nuttall said: “SriLankan generates the majority of its revenue from overseas markets and contributes over $700mn in foreign currency earnings to the Sri Lankan economy every year. The airline has also been a constant facilitator of tourism and foreign trade for the country regardless of the external environs and its challenges. “In fact, SriLankan remains the largest carrier of tourists into the country and collaborates frequently with stakeholders in the local industry to promote destination Sri Lanka globally.” He noted: “We played a key role during the pandemic by flying in critical medicines and vaccinations to the country when other airlines cut back flights. The airline has also spared no effort in supporting the embattled healthcare sector of the country and continues to airlift consignments of donated medicines and medical supplies free of freight charges. To date, we have carried nearly 60,000kg of international medical donations to Sri Lanka.” Nuttall also touched upon his airline’s network and said: “We monitor our network on a weekly basis. Most of the growth that we talked about comes from frequency increases, but we do have three to four new destinations that we believe will work well for us and compliment the network once we have been able to grow the fleet. “In terms of non-performing routes, we do have a couple that are struggling at present. However, we are managing to limit the losses by proactively managing capacity and we believe they will work as tourism returns.” Asked whether SriLankan intended to acquire new aircraft either for fleet replacement or expansion in mind, the CEO said: “We operated with a fleet of 27 aircraft pre-Covid-19 and made the decision to not replace some of the aircraft that left the fleet during the pandemic. More aircraft will exit the fleet next year as leases expire, but we plan to initiate a request for proposal to lease replacement aircraft in the future in support of our operational plans.”

There is a “big competition” between European and Asian markets for liquefied natural gas, HE the Minister of State for Energy Affairs, Saad bin Sherida al-Kaabi, said and noted: “Qatar is in discussions with Asian and European markets for LNG supply.” Replying to a question by Gulf Times at a press conference at the QatarEnergy yesterday, al-Kaabi said: “Qatar is not worried about LNG markets. We are in discussions with Asian and European markets for LNG supply… very soon we will announce big contracts, whether it is Asia or Europe”. On “higher LNG prices” prompting major economies like China and India to tap cheaper forms of energy such as coal, al-Kaabi told Gulf Times. “Higher gas prices are caused by many factors. One of these is the Ukraine issue, which has made it a much bigger problem. “If you go back a little bit, it was due to everybody pushing for green and demonising oil and gas companies and there were not enough investments (in the sector). And that caused higher price, which started before the Ukraine issue. The Ukraine issue has just made it a much bigger problem. “You cannot take a short-term view of what’s happening today. Gas prices, which you see in Europe today are due to circumstances there. Majority of the contracts that India and China have, are long-term. Today, they are actually not paying a very high price in comparison to Europe. I think they are getting a very reasonable price. If you analyse the spot price (LNG), you will see it as expensive. “Coal, by the way, is also 300% higher than it used to be. And its utilisation is probably the highest that we have ever seen. Coal has double the pollution of gas.” Al-Kaabi said: “I am not worried about the markets. There are lots of markets available to us. There is a big competition now between Europeans wanting to buy and Asians wanting to buy. And we are in discussions with all…Very soon, we will announce big contracts, whether it is Asia or Europe.” Earlier addressing the event, the minister said the new LNG volumes, which Qatar will bring to the market, come at a time when natural gas assumes “greater importance” in light of recent geopolitical turmoil and amidst the dire need for cleaner energy to meet global environmental objectives. “These volumes are a welcome addition given the increasing global concern not just over energy security, but also over a pragmatic energy transition as well as fair and equitable access to cleaner energy. “In this context, we must not forget to highlight the advanced environmental characteristics of the NFE and NFS projects, including significant carbon capture and sequestration technologies and capacity, which contribute to our targets of more than 11mn tonnes per year of carbon capture and storage by 2035. “And we will continue to dedicate all efforts to power lives with cleaner energy in every corner of the world for greater economic growth and a better tomorrow for all,” HE al-Kaabi added.    

Shell’s collaboration with Qatar is “very strong”, CEO Ben van Beurden said and noted: “Qatar is a world class leader in liquefied natural gas.” He was speaking at an event at the QatarEnergy headquarters yesterday where QatarEnergy announced its selection of Shell as its second international partner in the North Field South (NFS) expansion project. NFS comprises two LNG mega trains that will have a combined capacity of 16mn tonnes per year (mtpy). It will raise Qatar’s total LNG production capacity to 126 mtpy, by 2027 from 110mn tonnes per year that will be achieved through completion of the North Field East (NFE) project in 2026. Van Beurden said: “It is very important to supply more gas to the world. The world’s transition to a zero-emission energy source will take time. Until such time fossil fuels are required. “As for natural gas, it emits far less carbon and is easy to transport to countries around the world. So, it can provide countries secure supplies of reliable energy.” Commenting on a temporary price cap on natural gas in Europe, the Shell CEO said EU politicians realise the plan is complicated. “I am sure this will settle in an appropriate and responsible way that will really benefit both markets and consumers in Europe,” he told the ceremony; adding; “Europe will have to reduce demand from industry for gas.” HE the Minister of State for Energy Affairs Saad bin Sherida al-Kaabi noted: “Shell brings great capabilities and expertise in this field. We welcome them and look forward to working with them in this project in a manner that enhances our decades-long relationship and fruitful strategic partnerships in Qatar and around the world.” Al-Kaabi also thanked CEO Ben van Beurden “for his distinguished role in advancing our partnership to an unprecedented level and for a relationship that will extend for decades.” Recently, Shell announced that van Beurden has decided to retire at the end of this year. The minister also congratulated Wael Sawan, who was present at the ceremony yesterday, for his selection as the next CEO of Shell from next year. “We wish him all the success,” al-Kaabi said.