Qatar’s budget surplus is expected to widen to 12% of GDP in 2023 on the assumption that oil and gas prices will remain high, an analysis has shown.Last year, according to an Emirates NBD estimate, Qatar's budget surplus may have widened to over 10% of GDP. The regional banking group sees the budget surplus widening to 12% of GDP this year.Qatar’s budget has benefited from the surge in oil and natural gas prices in 2022, with oil and gas revenues up 67% year-on-year (y-o-y) in the first half of 2022, Emirates NBD said recently.Other revenues have also increased sharply in 2022, 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, 2022.According to the Ministry of Finance, the budget for fiscal 2023 estimated a surplus of QR29bn. The budget has set spending at QR199bn with total revenue of QR228bn next year.Qatar’s oil revenue is expected to be QR186bn and non-oil revenue QR42bn this year.Higher revenue projected for 2023 (QR228bn) has been mainly due to the adoption of an average oil price of $65 per barrel for fiscal 2023 in place of $55 per barrel in 2022.Higher budget surplus in the first three quarters of 2022 denotes favourable oil and gas prices, which clearly helps Qatar to manage its assets and debts quite remarkably.Recent data from the Ministry of Finance showed Qatar’s financial surplus exceeded QR77bn in the first nine months of 2022 compared to QR4.9bn during the period in 2021.Revenues during the first nine months of 2022 reached QR232.6bn, with QR193.9bn coming from oil and gas, and QR38.6bn from non-oil revenues, exceeding the 2021 total revenue of QR193.7bn.Thrice in the last 10 years, Qatar achieved similarly huge surpluses: 2012 (QR77bn), 2013 (QR106.3bn), and 2014 (QR108.6bn).According to QNB Economics, crude oil prices could see a further upside, as the bank expects physical markets to tighten further on the back of supply constraints and stronger global demand.QNB expects prices to be well supported in a range of between $90 and $115 per barrel over the coming quarters.“On the demand side, after several quarters of negative economic growth de-ratings by analysts and international organisations, there is now scope for a more positive outlook. In fact, we expect stronger than previously anticipated economic growth in all major economies over the next couple of quarters, including in the US, Europe and China,” QNB Economics said in a recent report.Recently, researcher FocusEconomics noted Qatar’s public debt will decline over the next three years from 39.9% this year to 38.7% of GDP in 2026.Next year, the country’s public debt has been estimated to be 40.8% and 39.7% in 2025.
Curbside access restrictions imposed at Hamad International Airport (HIA) have been lifted following the conclusion of the FIFA World Cup Qatar 2022.Qatar’s two airports - HIA and Doha International Airport (DIA) imposed restricted curbside access from November 1 “to preserve the security, safety and comfort of all passengers and visitors during the FIFA World Cup Qatar 2022.”Short-term parking rate during the first two hours(barring the grace period) will be QR15 for every 30 minutes Parking fee during the third hour will be QR25 for every 30 minutes, increasing to QR35 for every 30 minutes (fourth hour onwards)During the restricted period, access to the arrival and departure curbsides were opened only to authorised vehicles, such as Mowasalat (Karwa)’s limousines and taxis, authorised vehicles for persons with reduced mobility, vehicles transporting Qatar Airways first and business class passengers, and select airport bus shuttles.According to Hamad International Airport, short-term parking rate will now be QR15 during the second, third and fourth 30 minutes block.The first 30 minutes will be grace period, which means users will not have to pay anything if they exit the short-term parking zone before the 30-minute period elapsed.Short-term parking rate during the first two hours (barring the grace period) will be QR15 for every 30 minutes.The short-term parking rate during the third hour will be QR25 for every 30 minutes, increasing to QR35 for every 30 minutes (fourth hour onwards). HIA also said those who pre-book can save 20% on parking rates.
Beyond the Tarmac High inflation, interest rates and energy costs may put global air freight under mounting pressure in 2023 as headwinds continue to affect air cargo demand. A strong dollar affects air cargo and as many costs are denominated in the greenback, the currency’s appreciation adds another layer of cost on top of soaring inflation and high jet fuel prices. Revenues are expected to be $149.4bn, which is $52bn less than 2022 but still $48.6bn stronger than 2019, according to the International Air Transport Association (IATA). With economic uncertainty, cargo volumes are expected to decrease to 57.7mn tonnes, from a peak of 65.6mn tonnes in 2021. As belly capacity grows in line with the recovery in passenger markets, yields are expected to take a significant step back. IATA expects a fall of 22.6% in cargo yields, mostly in the latter part of the year when the impact of inflation-cooling measures are expected to bite. To put the yield decline in context, cargo yields grew by 52.5% in 2020, 24.2% in 2021 and 7.2% in 2022. Even the sizeable and expected decline leaves cargo yields well-above pre-Covid levels. This year, air cargo revenues played a key role in cutting airline industry losses with revenues expected to reach $201.4bn. That is an improvement compared with the June forecast, largely unchanged from 2021, and more than double the $100.8bn earned in 2019. “Air cargo continues to demonstrate resilience as headwinds persist. Cargo demand in October - while tracking below the exceptional performance of October 2021- saw a 3.5% increase in demand compared to September. This indicates that the year-end will still bring a traditional peak-season boost despite economic uncertainties. But as 2022 closes out it appears that the current economic uncertainties will follow into the New Year and need continued close monitoring,” noted Willie Walsh, IATA’s director general. The International Air Cargo Association (TIACA) says the current situation is temporary and that later in 2023 central banks are expected to start reducing interest rates when inflation may come under control. Although before things improve, the industry can expect a further slowdown as energy costs are expected to remain high through winter 2022, particularly in Europe. But structurally the industry is in a good place, the association said and noted that towards the second half of 2023 it could see demand picking up compared to this year. TIACA says air cargo has shown quality performance in moving perishables, high tech, pharmaceutical and e-commerce commodities. Current retail inventory levels are high but when consumer spending resumes the industry can expect to see demand across the product range. “With Covid restrictions in China starting to relax as the government pulls back from the zero-Covid policy we can expect that production levels, which have been impacted periodically these past two years as manufacturing centres were shut down temporarily, to return to a more normalised situation,” TIACA says. There are many positive things, which the industry can focus on such as innovation, which since early 2020 has been phenomenal, from process innovation to technical innovation to people and skills innovation. One area that the association hopes to see improvement in 2023 is in the regulatory environment as air cargo needs a much more flexible regime to be in place so operators can deploy their equipment where the demand is needed. With giant shipping companies moving into air cargo and coming onshore offering integrated logistics services like forwarders, major forwarders are focusing on consolidation and trying to gain a position. “2023 might be unclear and the reality is that we will not know until we lift the lid, but the long-term prognosis for air cargo is solid with trade continuing to outpace the global economy,” TIACA says. Boeing’s 20-year forecast is for trade to grow 2.8% a year, cargo volume to rise 4.1% a year, and the global freighter fleet to grow from 2,240 aircraft in 2021 to 3,610 freighters by 2041. Huge investments are required to meet this demand and if major global players open up their wallets, the air cargo industry’s long-term prognosis will indeed be solid.
Qatari banks have seen their operating environment improving considerably thanks to favourable hydrocarbon prices in 2022, which helped them reduce their reliance on external funding.Leading credit rating agencies see a stable outlook on Qatari banks’ operating environment amid regional and global economic challenges.Local banks’ external debt is expected to drop this year and analysts believe there may be a broad stabilisation over the next couple of years.According to QNB Financial Services (QNBFS), Qatar banking sector's total assets had gone up 0.1% until October this year, totalling QR1.83tn.Driven by the private sector, the Qatari banking sector saw overall loans increasing by 0.4% to QR1.22tn in October, QNBFS said.Loans have edged up by 0.2% so far in 2022, compared to a growth of 7.8% in 2021. Loans grew by an average 7.6% over the past five years (2017-2021), QNBFS said.Deposits declined by 1.1% during October 2022 to QR954.2bn, due to a drop both in non-resident and public sector deposits.Deposits have gone down by 2% so far in 2022, compared to a growth of 7.6% in 2021. Deposits grew by an average 6.1% over the past five years (2017-2021), the report said.The pandemic impact on the Qatari banks' financial profiles has been contained due to the government’s fiscal response, Fitch Ratings said recently.The sector's healthy asset-quality metrics have largely stabilised (end-H1, 2022 average Stage 3 loans ratio: 2.8%) despite the Qatar Central Bank's (QCB) credit deferrals winding down since end-Q1,2022.Qatari banks’ profitability is strengthening, underpinned by higher interest rates and increasing economic activity. Loan impairment charges (LICs) generally reduced.As a result, Fitch Ratings noted the sector-average operating profit/risk-weighted assets (RWAs) ratio increased to 3% in H1,2022 (annualised; 2021: 2.5%; 2019: 2.8%).Qatari banks maintain adequate capital buffers (end-H1, 2022 average common equity Tier 1 ratio: 13.7%; minimum regulatory requirement: 8.5%). The sector's healthy pre-impairment operating profitability and adequate provisioning levels mitigate asset-quality risks.Net profit of the Qatari banks rose 4% year-on-year in the first half of 2022, driven by widening net interest margins and higher non-interest income, credit rating agency Moody’s said.The Qatari banks Moody's rates reported an aggregate net profit of QR12.9bn in the review period.Qatar banks are expected to see improvement in bottom-line and return on assets should reach pre-Covid levels by 2023, a top Moody’s executive said in September."We expect the banks' bottom-line profitability to continue to improve in 2022 as operating income continues to grow, while provisioning charges should stabilise," Nitish Bhojnagarwala, vice president, senior credit officer, Moody's told a roundtable.Qatari banks external debt is expected to drop by 8% this year, credit rating agency 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.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, S&P noted.The largest financial institution in the Middle East and Africa (MEA) region, QNB had earned a net profit (before the impact of hyperinflation) of QR12.3bn in nine months up to September, up 20% on the same period last year.
National carrier Qatar Airways operated nearly 14,000 flights during the FIFA World Cup Qatar 2022, which concluded on December 18 and was chosen as ‘The Greatest Tournament in the 21st Century’ in a BBC News poll.Qatar Airways provided “dedicated” passenger overflow spaces outside Hamad International Airport and Doha International Airport, at no cost, where football festivities and live entertainment could be enjoyed while also providing storage space for luggage and carry-ons. This space allowed fans to continue enjoying the celebrations before they departed to their respective destinations.As part of the commitment to make the first ever FIFA World Cup Qatar 2022 hosted in the Middle East and Arab world an “all-inclusive” gala event, Qatar Airways tied up with flydubai, Kuwait Airways, Oman Air and Saudia to connect match ticket holders to Doha via Match Day Shuttle flights for 24-hour experiences, during the tournament period.In 2017, Qatar Airways announced its partnership with FIFA as the 'Official Airline'. The alliance has gone on to connect and unite fans globally, with the national airline also sponsoring numerous football tournaments such as the FIFA Confederations Cup 2017, the 2018 FIFA World Cup Russia, the FIFA Club World Cup, and the FIFA Women's World Cup.In September, Qatar Airways was named “Airline of the Year” by the international air transport rating organisation, Skytrax, for an unprecedented seventh time. At a glittering event in London, the leading global airline also took home three additional awards including World’s Best Business Class, World’s Best Business Class Lounge Dining, and Best Airline in the Middle East.The year 2022 saw Qatar Airways enhancing its schedule and network by increasing frequencies to many key destinations across the world.Qatar Airways currently flies to more than 150 destinations worldwide, connecting through its Doha hub, Hamad International Airport.This year Qatar Airways became the first airline in the Middle East and Africa region to announce its commitment for an international SAF offtake agreement.Qatar Airways and sustainable aviation fuel (SAF) producer Gevo, Inc have signed an offtake agreement, where the airline will purchase 25mn gallons of neat SAF over the course of five years with deliveries expected to commence in 2028 at various airports in California.Qatar Airways will be uplifting 5mn gallons of neat SAF every year and will blend it with its existing supply of conventional jet fuel.In October, Qatar Airways announced the “deepening of its relationship” with JetBlue through the expansion of the airlines’ codeshare agreement.This expansion allows JetBlue passengers to enjoy unrivalled travel options between the United States and 11 new destinations, in eight different countries across Africa and Asia via Doha’s Hamad International Airport.In August, Qatar Aviation Services (QAS), the subsidiary of Qatar Airways Group, announced its partnership with International Air Transport Association (IATA) to become the first ground handler globally to join the new expansion of the IATA Environmental Assessment Programme (IEnvA) for ground service providers.The IEnvA programme for ground service provides a framework for achieving environmental sustainability across all ground operations. Taking advantage of the knowledge and experience garnered from the airline programme, ground service providers can rely on its definitive guidance to reduce their impact on the environment, and improving health and safety for both employees and the community, while maintaining operational efficiency.In May, Qatar Airways and Virgin Australia unveiled a new strategic partnership that will significantly expand both airlines’ networks, lounges and loyalty programmes.The partnership gives travellers greater access, unparalleled customer experience and unique benefits when travelling between Australia and Qatar Airways’ global network, with convenient transit options across Qatar Airways’ Australian gateways and key Virgin Australia hubs, including Melbourne, Sydney, Brisbane, Adelaide and Perth.The strategic alliance will provide a critical trade and tourism boost for Australia, while opening a world of new travel opportunities for both airlines customers.The multi-year sponsorship agreement between Qatar Airways and Concacaf entered its second year in 2022, with the airline taking centre stage as the Presenting Sponsor for the 2022-23 Concacaf Nations League (CNL). The CNL presented by Qatar Airways is a premier international football competition of men’s national teams from North America, Central America, and the Caribbean.Following six months of intense process and product audits, Qatar Airways Cargo announced in January that its strict adherence to the highest standards and relevant regulations has been accredited CEIV Live Animals certification by IATA.In November, Hamad International Airport opened the newly expanded terminal as part of its ‘Phase A’ expansion, which means the state-of-the-art airport will now be able to cater to 58mn passengers annually.The newly expanded terminal houses HIA’s second airport hotel – ‘Oryx Garden’ and ‘Orchard’ – an indoor tropical garden that has sourced 300 plus trees and 25,000 plants from sustainable forests around the world.Drenched in natural light and featuring sustainably sourced plants and shrubs, it offered a show-stopping, luxury shopping experience to fans with many first-of-a-kind retail outlets.In the expanded terminal, Qatar Duty Free started offering retail and F&B options with more than 65 retail and dining outlets spread across its three levels.The expansion now enables travellers to “seamlessly transfer” from one area to another, greatly reducing their wait time at the airport.
QatarEnergy made significant strides in realising the North Field Expansion by choosing partners this year for both North Field South (NFS) and North Field East (NFE) expansion, which is the global industry’s largest ever LNG project.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.The North Field expansion plan includes six LNG trains that will ramp up Qatar’s liquefaction capacity from 77 mtpy per year to 126 mtpy by 2027.Four trains will be part of the North Field East and two trains will be part of North Field South project.In January this year, QatarEnergy announced the awarding of a major Engineering, Procurement, Construction, and Installation (EPCI) Contract for the offshore scope of its North Field Expansion Project to McDermott Middle East Inc.The scope for the awarded contract includes some 13 normally unmanned wellhead platforms topsides (eight for NFE and five for NFS), in addition to various connecting pipelines and the shore approaches for the NFE pipelines, beach valve stations and buildings.In March, His Highness the Amir Sheikh Tamim bin Hamad al-Thani inaugurated the Barzan Gas Plant at a special ceremony held at Ras Laffan Industrial City.The Barzan Gas Plant will produce and process natural gas from the North Field to serve the requirements of local power generation and water desalinisation.It will also produce associated hydrocarbon products for supply to local refinery and petrochemical industries as well as for export to international markets.In the same month, QatarEnergy’s updated Sustainability Strategy set aggressive targets by capturing in excess of 11mn tonnes of CO2 annually in the country by 2035.QatarEnergy’s Sustainability Strategy outlines multiple initiatives to reduce greenhouse gas emissions, including flagship projects such as the further deployment of carbon capture and storage (CCS) technology.These projects will further reduce the carbon intensity of Qatar’s LNG facilities by 35% and of its upstream facilities by at least 25% (compared to previous targets of 25% and 15%, respectively) bolstering Qatar’s commitment to responsibly supply cleaner LNG at scale in support of the energy transition.In April, Industries Qatar (IQ) and Mesaieed Petrochemical Holding (MPHC) gave their approval to Qatar Vinyl Company (QVC) for a new PVC (polyvinyl chloride) project with 350,000 tonnes per annum capacity at an estimated cost of $239mn.In the same month, QatarEnergy signed a series of time-charter parties (TCPs) with a subsidiary of Mitsui O.S.K Lines (MOL) for the long-term charter and operation of four LNG ships, constituting the first batch of TCPs awarded under QatarEnergy’s massive LNG shipping programme.In April, a joint venture between Técnicas Reunidas SA (TR) and Wison Engineering (Wison) was also selected as the EPC contractor and awarded a lump-sum contract by QatarEnergy for the expansion of the sulfur handling, storage, and loading facilities within Ras Laffan Industrial City.In June and July, the $29bn North Field East (NFE) expansion, the single largest project in the history of global LNG industry, saw QatarEnergy joining hands with five global energy companies – TotalEnergies, Shell, ExxonMobil, Eni and ConocoPhillips.The five partners of QatarEnergy in the prestigious project were chosen through a competitive process that started in 2019, which will expand Qatar’s LNG export capacity from the current 77mn tonnes per year (mtpy) to 110 mtpy by 2026.While it was Eni’s first entry ever into Qatar’s upstream sector, the four other global energy companies - TotalEnergies, ExxonMobil, Shell and ConocoPhillips - have been QatarEnergy’s partners in the energy industry for many years.The multi-billion dollar North Field Expansion, the largest LNG development in global history, will generate substantial revenues for Qatar and hugely contribute to the country’s GDP, noted HE the Minister of State for Energy Affairs Saad bin Sherida al-Kaabi.The North Field expansion, comprising North Field East (NFE) and North Field South (NFS), will provide significant benefits for all sectors of the Qatari economy during the construction phase and beyond, al-Kaabi said in reply to a question by Gulf Times at a media event at QatarEnergy headquarters in June.In July, Dolphin Energy marked 15 years of operations after recording the first gas flow from Qatar to the UAE on July 10, 2007.Dolphin Energy’s major strategic initiative, the Dolphin Gas Project, involves the production and processing of natural gas from Qatar’s North Field, and transportation of the dry gas by sub-sea export pipeline from Qatar to the UAE, which began in July 2007.In August, QatarEnergy awarded the engineering, procurement and construction (EPC) contract to Samsung C&T for its QR2.3bn industrial cities solar power project (IC Solar).This project includes two large scale photovoltaic (PV) solar power plants to be built in Mesaieed Industrial City (MIC) and Ras Laffan Industrial City (RLIC) and is expected to start electricity production by the end of 2024.In September, QatarEnergy announced that it selected TotalEnergies as the first international partner in the multi-billion dollar North Field South (NFS) expansion project.In the same month, QatarEnergy signed a memorandum of understanding (MoU) with General Electric (GE) to collaborate on developing a carbon capture roadmap for the energy sector in Qatar.In October, QatarEnergy chose Shell as its second international partner in the North Field South (NFS) expansion project.In October HE the Minister of State for Energy Affairs Saad bin Sherida al-Kaabi, also the President and CEO of QatarEnergy, received the 2022 ‘Energy Executive of the Year’ award, which was presented to him by Energy Intelligence in London.In October, QatarEnergy announced an oil discovery in the 4-BRSA-1386D-RJS well in Brazil's world class Sepia oil field, which is located in the prolific Santos Basin in water depths of about 2,000 meters off the coast of Rio de Janeiro.In October, Qatar’s first and one the region’s largest solar plants was inaugurated by His Highness the Amir Sheikh Tamim bin Hamad al-Thani at Al Kharsaah.The multi-billion dollar 800MW Al Kharsaah Solar PV Power Plant (KSPP) was constructed on a 10sq km land area and can provide the national grid with about 10% of peak electricity demand.In the same month, QatarEnergy announced the signing of a share sale and purchase agreement with Qatar Electricity and Water Company (QEWC) to acquire QEWC’s 49% interest in Siraj Energy, which would result in Siraj Energy becoming a wholly-owned affiliate of QatarEnergy, subject to customary approvals.October also saw QatarEnergy selecting 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 16 mtpy.In October, His Highness the Amir Sheikh Tamim bin Hamad al-Thani issued Amiri Decision No 48 of 2022 on restructuring the QatarEnergy Board of Directors.The decision stipulated that the QatarEnergy Board of Directors would be reconstituted with His Highness the Deputy Amir Sheikh Abdullah bin Hamad al-Thani as Chairman.In October, Affiliates of QatarEnergy and ExxonMobil have agreed to independently offtake and market their respective proportionate equity shares of LNG produced by the Golden Pass LNG Export Project located in Sabine Pass, Texas, the US.In November, QatarEnergy announced a successful bid for Parcel 8 of the Orphan Basin, offshore the province of Newfoundland and Labrador in Canada, expanding its North American footprint.In the same month, QatarEnergy entered into a 27-year Sale and Purchase Agreement (SPA) with China Petroleum & Chemical Corporation (Sinopec) for the supply of 4mn tonnes per year of LNG to the People's Republic of China.In November, QatarEnergy and Chevron Phillips Chemical Company (CPChem) announced they have taken a Final Investment Decision (FID) on the Golden Triangle Polymers Plant, an $8.5bn world-scale integrated polymers facility in the Texas Gulf Coast area in the US.In November, Qatar’s first long-term LNG supply deal with Germany was announced with QatarEnergy signing two LNG sale and purchase agreements (SPAs) with ConocoPhillips affiliates for the delivery of up to 2mn tonnes per year for at least 15 years.This month, QatarEnergy and Japan’s Qatar Petroleum Development Company (QPD) signed a new agreement for the continued development and production of the Al-Karkara and A-Structures oil fields, located in the territorial waters of Qatar.Also in December, QatarEnergy, in a consortium with TotalEnergies and Petronas, has been awarded the Agua-Marinha Production Sharing Contract (PSC), under the 1st Cycle Permanent Offer round, by Brazil’s National Agency of Petroleum, Natural Gas, and Biofuels (ANP).
Qatar has achieved “commendable” progress in developing medium-term fiscal frameworks (MTFFs) with fiscal anchors that clearly incorporate multi-year revenue initiatives and spending priorities, International Monetary Fund said in a report.As well as stronger linkages with budget planning and execution, the MTFFs should be closely coordinated with medium and long-term government development strategies and plans and supported by sound fiscal institutions, IMF said in a recent report “Economic prospects and policy challenges for the GCC countries”.Additionally, given the increasing role of GCC Sovereign Wealth Funds (SWFs), there is a need to enhance sovereign asset-liability management frameworks closely aligning them with MTFFs.To further enhance the credibility of fiscal policy, regular public communication of fiscal plans and outcomes, as well as of the government strategy on oil revenue management and its impact on reserves and domestic liquidity would be beneficial.On GCC energy producers, IMF said the impact of the high oil prices and a jump in demand for non-Russian gas is likely to expand their role in global energy flows.For instance, IMF noted QatarEnergy announced joint-venture agreements with five of the biggest oil companies to develop a $29bn project known as the North Field East, which aims to increase Qatar’s annual LNG output from the current 77mn tons per year (mtpy) to 110mtpy by end-2027, and further to 126mtpy by 2028.Since the war in Ukraine, Qatar has also signed partnership agreements with several European countries to increase gas supply to these countries over the medium term.Similarly, the Saudi Arabian authorities had already announced medium-term plans to lift oil production capacity by more than 1mbpd to reach over 13mbpd by 2027 (as well as to develop gas production).According to IEA estimates, with an eye on energy security Middle East National Oil Companies (NOCs) are the only ones among all regions that are planning to invest more in oil and gas activities in 2022 as compared to 2019.On Qatar’s economic growth the report said the country’s non-hydrocarbon growth is expected to reach 4% in 2022, supported by favourable hydrocarbon prices and the start of the North Field expansion project, as well as the World Cup-induced buoyancy.Its hydrocarbon growth, however, is projected to be "modest" in 2022 as Qatar is already producing at capacity.Inflation in the GCC region is rising but remains broadly contained, IMF noted.Inflation in GCC has picked up from 0.7% (y-o-y) in July 2021 to 3.2% (y-o-y) in July 2022, mainly driven by higher food prices.Inflation is expected to reach 3.6% on average this year (ranging from Saudi Arabia at 2.7% to Qatar and Kuwait at 4 ½ percent and the UAE above 5%).Subsidies and price caps on certain products (e.g., some food products, gasoline, electricity and water), a strong dollar that helps reduce import costs, subdued rent prices amidst higher supply in particular for some segments (e.g., villas), a limited share of food in the CPI basket, and continued labour market slack (example in Saudi Arabia) have helped contain pressures from supply- side shocks and higher inflation in trading partners.Over the medium term, inflation is expected to moderate to about 2% as global inflationary pressures abate, IMF noted.
Qatar will continue high spending on projects supporting the local economy, HE the Minister of Finance Ali bin Ahmed al-Kuwari said and noted some 22 new projects will be implemented in 2023, at a total cost of QR9.8bn.Addressing editors of various Qatari media outlets in Doha yesterday, al-Kuwari said the continued high spending on public projects is in line with the State’s plans to complete and finalise infrastructure projects, especially those related to existing and new lands of citizens as well as projects supporting the local economy.The allocations for major projects (for 2023) are to decrease by 13.6%, compared to 2022, to reach QR63.9bn with the completion of several infrastructure and strategic projects, the latest of which is the expansion of Hamad International Airport, prior to the start of FIFA World Cup Qatar 2022.“As part of efforts to ensure a dignified life and advanced standard of living for Qatari citizens, an increase in salaries by QR4bn (compared to 2022) to QR62.6bn has been set in 2023 budget. This comes after His Highness the Amir’s decision to raise pension for retirees,” al-Kuwari noted.This increase, the minister noted, is caused by higher rates of public sector employment for 2023, prompted by the new government structure approved by His Highness the Amir towards the end of 2021. Spending will also cover grants, allowances and retirement based on the recent pension plan, which sets a minimum age and period of service.Qatar, he said, will continue to focus on the health and education sectors, with QR21.1bn allocated to the health sector, about 11% of the total expenditures, and QR18.1bn for the education sector, nearly 9% of the total expenditures.While spending on the sports and culture sector will drop to QR9.3bn in fiscal 2023, al-Kuwari noted “it is because of the completion of all projects related to FIFA World Cup Qatar 2022. The assets already developed will still give Qatar an advantage when presented with an opportunity to host other sporting events and contribute to realising the state’s goal of becoming a global sports hub.”
Driven by higher LNG revenues from the North Field expansion, Qatar expects to achieve a double-digit growth by 2027, said HE the Minister of Finance Ali bin Ahmed al-Kuwari.Addressing editors of various Qatari media outlets in Doha Tuesday al-Kuwari said the national economy is expected to grow by 4.5% in 2023 as per International Monetary Fund (IMF) calculations.At the event, al-Kuwari made a presentation on Qatar’s budget for the fiscal year 2023, which has set spending at QR199bn with total revenue of QR228bn, generating an estimated surplus of QR29bn.Qatar’s oil revenue is expected to be QR186bn and non-oil revenue QR42bn in 2023.Higher revenue projected for next year (QR228bn) has been mainly due to the adoption of an average oil price of $65 per barrel for fiscal 2023 in place of $55 per barrel in 2022.“This increase is the result of a remarkable recovery in global energy prices during the current year, which international financial institutions estimate will continue to rise in the medium term. Total oil and gas revenues for the next year are estimated at QR186bn compared to QR154bn in 2022, which represents an increase of 20.8%,” al-Kuwari noted. The conservative figure of $65 per barrel on which the 2023 budget has been based is part of the strategy of the Ministry of Finance to allocate financial resources towards existing commitments expected during the year to fund National Development Strategy (NDS) programmes and projects.Non-oil revenues for 2023 remain stable at QR42bn, compared to the 2022 budget, he said. The Ministry of Finance is currently co-ordinating with relevant authorities to follow up on the implementation of some measures that would increase non-oil revenues during 2023.Some of these measures, al-Kuwari noted, will include expanding the list of goods covered by excise tax and reviewing some government fees.“Estimates of revenues resulting from the possible implementation of these measures (during 2023) were not added to the budget based in line with the Ministry of Finance’s conservative approach to public revenue estimates,” the finance minister said.Al-Kuwari noted that Qatar continues to focus on the health and education sectors, with QR21.1bn allocated to the health sector, about 11% of the total expenditures, and QR18.1bn for the education sector, nearly 9% of the total expenditures.On the other hand, he said spending on the culture and sports sector is estimated at QR9.3bn, compared to QR16.6bn in the 2022 budget, or 5% of the total budget. The decline in spending on the culture and sports sector is attributed to finalising all projects tied to the hosting of the FIFA World Cup Qatar 2022 and related expenses.Qatar to implement VAT only after ‘comprehensive’ studyQatar will implement value added tax (VAT) only after a comprehensive study, HE the Minister of Finance Ali bin Ahmed al-Kuwari said Tuesday.“We have not set any timeframe for VAT implementation,” he said in reply to a question at a media event Tuesday.The VAT framework treaty adopted by the GCC has called for each member state to impose a 5% VAT on designated goods and services.“We will look at tax regime from all facets seriously to see its impact on the citizens and society,” al-Kuwari said.
GCC countries will benefit the most from international energy market developments in 2023, the Economist Intelligence Unit said and noted they will see high oil and gas revenue spillover and help to drive business activity in non-energy sectors — especially through state-backed investment in economic diversification projects.Major oil and gas producers in the Middle East have benefited substantially from strong global demand, rising output and high prices for their energy exports in 2022, and the region’s net energy exporters — except Iran — can look forward to another year of “decent returns” from international markets in 2023.The Opec+ alliance will solely prioritise price levels, despite concerted diplomatic efforts by the US and European allies to persuade the cartel to increase production.The recent move by Opec+ to cut output by 2mn barrels per day will be borne by Saudi Arabia and, to a lesser degree, the UAE.The actual cut to output will be about half the headline figure, as several major producers, most notably Nigeria and Russia, are producing well below their current quotas.“We expect Opec+ to maintain its solidarity and forecast that oil prices will remain above $90/barrel until at least mid-2023,” EIU noted.The region’s travel and tourism industry is showing “strong signs of recovery” and international visitor arrivals could return to pre-Covid levels by the end of 2023 — largely owing to effective promotional campaigns, major investments and the release of pent-up demand, EIU noted.Domestic tourism has supported a “depressed” market in recent years and this will continue to be an important outlet for the tourism sector, along with regional arrivals.International arrivals to the GCC were back on an upswing and accelerated quickly in late 2021 and in 2022, and looking ahead they will be aided by vaccine rollout and safety measures, lighter travel restrictions, a further promotional drive and the release of pent-up demand for travel and tourism.In the longer term, travel, tourism and hospitality are identified as key ingredients of strategic growth plans and consequently are subject to pro-business and pro-investment reforms as well as receiving substantial investment from the public and private sectors.Inflation will be contained across the GCC in 2023 by exchange-rate pegs to the dollar and fuel subsidy regimes, EIU said.Elsewhere, elevated price pressures will weigh heavily on economic growth and stability in the region’s more troubled states and some major energy importers in the region.“The balance of risks to the region’s outlook is heavily weighted to the downside, which reflects various global and regional shocks that could act to undermine economic growth and stability, social cohesion and security.“Upside risks are limited to a low-probability scenario surrounding a quick resolution of the war in Europe leading to less volatility in commodity markets — food and fuel — and easing prices pressures, as well as the low risk of a stronger rebound of demand from China as Covid-19 disruption dissipates and the authorities guide the economy to much faster growth,” EIU said.
For many countries, one easy way to shore up depleted treasuries seems to be preventing foreign airlines from repatriating funds.In the last six months, the amount of airline funds for repatriation being blocked by governments has risen by more than 25% to $394mn. Total funds blocked now tally at close to $2bn, according to the International Air Transport Association (IATA).Airline funds are being blocked from repatriation in as many as 27 countries and territories. Last year, some 20 countries owed $1bn to airlines worldwide.Venezuela topped the list with $3.8bn of blocked airline funds since 2016. IATA has urged the Venezuelan government to settle the airline funds that have been blocked from repatriation since 2016 when the last authorisation for limited repatriation of funds was allowed by it.The other top markets with blocked funds are: Nigeria: $551mn, Pakistan: $225mn, Bangladesh: $208mn, Lebanon: $144mn, and Algeria: $140mn.IATA’s Director General Willie Walsh said: “Preventing airlines from repatriating funds may appear to be an easy way to shore up depleted treasuries, but ultimately the local economy will pay a high price.“No business can sustain providing service if they cannot get paid and this is no different for airlines. Air links are a vital economic catalyst. Enabling the efficient repatriation of revenues is a critical for any economy to remain globally connected to markets and supply chains.”The industry has to tackle the issue of blocked funds at a time when it is slowly recovering from one of the worst crisis hitting it in recent decades following the pandemic.IATA expects net airline industry losses of $6.9bn in 2022. This is significantly better than losses of $42bn and $137.7bn that were realised in 2021 and 2020 respectively.In 2023, airlines are expected to post a small net profit of $4.7bn — a 0.6% net profit margin. It is the first profit since 2019.Passenger numbers could surpass the four billion mark for the first time since 2019, with 4.2bn travellers expected to fly. However, the Covid situation in China and many other countries remain a major concern.Overall costs are expected to grow 5.3% to $776bn. That growth is expected to be 1.8 percentage points below revenue growth, thus supporting a return to profitability. Cost pressures are still there from labour and capacity shortages. Infrastructure costs are also a concern.In terms of blocked funds in Nigeria, repatriation issues arose in March 2020 when demand for foreign currency in the country outpaced supply and the country’s banks were not able to service currency repatriations.Despite these challenges, Nigerian authorities have been engaged with the airlines and are, together with the industry, working to find measures to release the funds available.“Nigeria is an example of how government-industry engagement can resolve blocked funds issues. Working with the Nigerian House of Representatives, Central Bank and the Minister of Aviation resulted in the release of $120mn for repatriation with the promise of a further release at the end of 2022. This encouraging progress demonstrates that, even in difficult circumstances, solutions can be found to clear blocked funds and ensure vital connectivity,” said Kamil al-Awadhi, regional vice-president (Africa and the Middle East).Airlines have also restarted efforts to recover the $3.8bn of unrepatriated airline revenues in Venezuela. There have been no approvals of repatriation of these airline funds since early 2016 and connectivity to Venezuela has dwindled to a handful of airlines selling tickets primarily outside the country.In fact, between 2016 and 2019 (the last normal year before Covid-19) connectivity to/from Venezuela plummeted by 62%. Venezuela is now looking to bolster tourism as part of its Covid-19 economic recovery plan and is seeking airlines to restart or expand air services to and from Venezuela.Success will be much more likely if Venezuela is able to instil confidence in the market by expeditiously settling past debts and providing concrete assurances that airlines will not face any blockages to future repatriation of funds. Pratap John is Business Editor at Gulf Times. Twitter handle: @PratapJohn
Higher budget surplus in the first three quarters of this financial year denotes favourable oil and gas prices, which clearly helps Qatar to manage its assets and debts quite remarkably.Recent data from the Ministry of Finance showed Qatar’s financial surplus exceeded QR77bn in the first nine months of 2022 compared to QR4.9bn during the period in 2021.Revenues during the first nine months of 2022 reached QR232.6bn, with QR193.9bn coming from oil and gas, and QR38.6bn from non-oil revenues, exceeding the 2021 total revenue of QR193.7bn.Thrice in the last 10 years, Qatar achieved similarly huge surpluses: 2012 (QR77bn), 2013 (QR106.3bn), and 2014 (QR108.6bn).“The 2022 budget surplus is mainly due to the remarkable control over expenditures and the rise in revenues with the recovery seen in oil prices,” the Ministry of Finance said.Qatar’s 2022 budget has been based on a conservative price of $55 per barrel.According to QNB Economics, crude oil prices could see a further upside, as the bank expects physical markets to tighten further on the back of supply constraints and stronger global demand.QNB expects prices to be well supported in a range of between $90 and $115 per barrel over the coming quarters.“On the demand side, after several quarters of negative economic growth de-ratings by analysts and international organisations, there is now scope for a more positive outlook. In fact, we expect stronger than previously anticipated economic growth in all major economies over the next couple of quarters, including in the US, Europe and China,” QNB Economics said.In a recent report, researcher FocusEconomics noted Qatar’s public debt will decline over the next four years from 45.5% this year to 38.7% of GDP in 2026.Next year, the country’s public debt has been estimated to be 39.9%, 40.8% in 2024 and 39.7% (2025).“With higher oil and gas prices and improved local liquidity situation, there is less reliance on non-resident deposits and optimisation in funding sources for (local) banks,” an analyst told Gulf Times.FocusEconomics researchers’ see a 4.5% rise in Qatar’s GDP during 2022, which is unchanged from last month’s forecast and 2.7% growth in 2023.GDP growth over the next four years has been forecast at 2.7% (2023), 2.9% (2024), 3.6% (2025) and 4.3% (2026).Also, Qatar is set to record its “fastest” GDP growth in seven years in 2022, FocusEconomics said and noted the gross domestic product will touch $216bn this year.
In addition to turning into a sporting destination, Qatar is also "vying to host" a variety of business forums and conferences as it seeks to establish itself as a business hub in the GCC, Alpen Capital has said in a report.This, the researcher noted, will provide impetus to Qatar’s retail market in the coming years.In addition to the ongoing FIFA World Cup Qatar 2022, some of the major international sporting events lined up to take place in the country include the Formula 1, TP Tennis Competition, International Golf Championship, the World Championship of Motorcycles, 2024 World Aquatics Championships, the 2030 Asian Games, European Tour Golf, and the MotoGP among others.Moreover, Qatar has been hosting several events in the run up to the 2022 FIFA World Cup – helping the industry recover from the lows of 2020.Consequently, Alpen Capital noted, tourist arrivals in the country increased by 5% y-o-y in 2021 while total travel and tourism spending revenues reached $16.5bn, contributing 10.3% to the country’s GDP – the highest amongst the GCC nations."All these factors are estimated to have helped revive the retail industry in Qatar," Alpen Capital said.As of H1, 2022, supply of organised retail space within malls in Qatar reached 1.7mn sq m, reflecting an increase of more 160% since 2015, Alpen Capital said.The size of Qatar’s wholesale and retail trade grew at a CAGR of 12.3% between 2015 and 2020 to reach $26.7bn, accounting for 15% of the GDP.The wholesale and retail trade contribution to GDP has remained stable over the years, indicating the growing importance of the industry within the economy. Despite the Covid-19 pandemic causing business disruptions, Qatar’s retail industry fared well during 2020 as the majority of stores and malls were allowed to reopen by summer with a range of mandatory health guidelines in place.During this period, the country witnessed several changes in consumer behaviour, especially in terms of buying patterns, spending trends, payment solutions, and utilisation of e-commerce platforms, Alpen Capital noted.The use of e-commerce witnessed a significant boost as consumers were forced to stay at home and rely on online channels. As per the Ministry of Transport and Communications, about 60% of the consumers in Qatar signified a desire to shop online.This led to the country’s retailers to restructure their strategy to incorporate online sales platforms.Consequently, many retailers in Qatar have moved to a blended, omni-channel distribution strategy, which involves boosting and expanding their digital offerings while also maintaining a brick-and-mortar footprint.However, the phased easing of Covid-19 restrictions in 2021 resulted in an encouraging return to pre-lockdown footfall levels in most retail malls.Consequently, the country’s retail market is estimated to have recovered from the slowdown during the pandemic, due to overall economic activity improving during the first year of the pandemic while inflation remained in the negative territory, Alpen Capital said.
Beyond the Tarmac Incidents involving disruptive passengers seem to have increased manifold following the Covid-19 pandemic, which forced countries around the world to enact strict laws on physical distancing and wearing masks on commercial airlines and other modes of transport. With passengers returning to the skies in growing numbers as governments ease Covid-19 related restrictions, it is essential that travellers understand the unacceptability and possible legal consequences of unruly or disruptive behaviour in aviation facilities and onboard aircraft. Unruly passengers remain a major concern for air carriers worldwide. While serious disruptive behaviour remains rare, it can often be costly and cause aircraft delays. Unruly passenger incidents include violence against crew and other passengers, harassment, verbal abuse, smoking, failure to follow safety and public health instructions and other forms of riotous behaviour. Although such acts are committed by a minority of passengers, they have a disproportionate impact. They create inconvenience, may threaten the health, safety and security of other passengers and crew, and can lead to significant operational disruption and costs for airlines. Evidence indicates that unruly and disruptive passenger incidents increased during the Covid-19, driven by non-compliance and flouting of face mask requirements and regulatory mandates put in place in an effort to further reduce the potential transmission of the virus to other passengers and crew. “We have seen a marked decrease in the reporting rates in areas where mask mandates were removed,” says the International Air Transport Association. Gaps in in the Tokyo Convention 1963 (TC63), which governs offences and certain other acts committed on aircraft means that many unruly passengers escape punishment for their misconduct. The main issue is that the country, where an aircraft is registered has jurisdiction over offences committed onboard. This causes problems at overseas airports, where local police may not have jurisdiction to deal with incidents that occur onboard foreign registered aircraft. This means unruly passengers are often released without charge which undermines the deterrent. IATA member airlines state this is the reason for prosecutions not proceeding in around 60% of unruly passenger cases. To address this, the association lobbied effectively for the International Civil Aviation Organisation (ICAO) to conduct a thorough review of TC63 in 2009. Countries agreed that amendments were needed, and this resulted in the Montreal Protocol 2014 (MP14). MP14 amends TC63 by extending jurisdiction over offences to the state of intended landing (destination) in addition to the state of aircraft registration. Other changes give greater clarity to what at a minimum constitutes unruly behaviour and reinforces the right of airlines to seek recovery of the significant costs from unruly passengers. MP14 entered into force in January 2020, following ratification by 22 ICAO Member States. Since then, further states have ratified bringing the current total to 41 with eight more becoming parties so far in 2022 including Kenya, Luxembourg and Romania. However, despite this progress, TC63 still covers around two thirds of global traffic. The more states ratify MP14 the more the jurisdiction gaps can be closed so that unruly passengers can be prosecuted according to uniform global guidelines. IATA announced changes in its reporting system to get a more accurate picture of the extent and nature of unruly passenger incidents. However, the last full year of statistics available under the (previous) reporting system showed that in 2017 the rate was one incident for every 1,053 flights. The top three issues were non-compliance with safety regulations, alcohol or other intoxication, and non-compliance with smoking regulations. Between 2007 and 2016, more than 58,000 unruly passenger incidents were reported on aircraft in-flight, data available with association show. These incidents include violence against crew and other passengers, harassment and failure to follow safety instructions. The global aviation industry led by IATA has recognised that it must do all it can to prevent incidents from happening to the extent possible. In addition to providing airlines with comprehensive guidance materials covering issues such as conflict de-escalation, responsible service of alcohol and restraint, the association is participating in several ongoing public-facing campaigns aimed at raising awareness among passengers of the types of prohibited conduct onboard and the consequences of irresponsible and criminal behaviour. Undoubtedly, preventing unruly incidents from happening in the skies and managing them effectively when they do occur is critical to the safety of global aviation.
The stronger dollar has supported the dollar-pegged Qatari riyal (at QR3.64), and there is only a very small chance of de-pegging, Oxford Economics said in its latest country report.Qatar’s exchange rate risk on an Oxford Economics data-driven methodology is now 2.3, up 0.2pts from six months ago but well below the Mena average of 4.5.The low risk score reflects the authorities’ long-standing commitment to the dollar peg, as well as large FX reserves. Risk rose in 2020 as the current account moved into deficit, but the score improved as the current account moved back to surplus in 2021, as exports recovered and oil and gas prices improved from the lows in 2020.The current account surplus has widened this year and will average 15% of GDP in 2022-23, Oxford Economics said.The sovereign credit risk score under Oxford Economics methodology is 3.4, unchanged from six months ago and well below the Mena average of 4.5. The score, it said reflects very high per capita incomes, large government reserves, strong external finances, and political stability.The budget deficit in 2017 was temporary, and the budget returned to surplus in 2018. However, it began to narrow again in 2019 and, given the slump in oil and gas prices, moved into deficit of 2.1% of GDP in 2020.The balance returned to surplus in 2021, which should rise close to 9% ofGDP in 2022-2023 due to higher oil and gas revenues, Oxford Economics said.The country’s trade credit risk – a measure of private sector repayment risk – remains very low by regional standards at three, compared with the regional average of 6.1. The main factors underpinning this rating are macroeconomic stability, the credible and well-established exchange rate regime, strong growth, very high GDP per capita, and a healthy, well-developed banking sector, the researcher noted.Higher oil prices should support bank liquidity, despite rising exposure to construction and real estate and persistent foreign funding risk.Concerns about the deteriorating global outlook have yet to overshadow the boost to Qatar from the month-long World Cup tournament, which ends on December 18.“We expect Qatar's recovery will continue in 2023, with strong gas demand continuing to support energy exports and output. That said, the fall in the manufacturing PMI below the 50-mark in October indicates moderating non-oil sector activity, consistent with our 2023 GDP growth forecast of 2.7%, after the 5.2% expansion seen this year,” Oxford Economics noted.
Qatar’s hosting of the FIFA World Cup and the AFC Asian Cup in 2023 will build the momentum towards travel and tourism recovery in the GCC region, the Economist Intelligence Unit (EIU) has said in a report.In its latest ‘Middle East outlook 2023’, EIU noted business activity, revenue and profitability in the travel, tourism and hospitality industries in the Middle East have taken a major hit in recent years stemming from the Covid-19 pandemic and then the Russian invasion of Ukraine.However, a corner appears to have been turned and momentum is building with international arrivals on the upswing in 2022 and a full recovery to pre-Covid levels of arrivals expected in late 2023 (or early 2024).“The recovery will be aided by major sports and cultural events — Qatar is hosting the FIFA World Cup in November and December 2022 and the AFC Asian Cup in 2023, while Saudi Arabia will increase the numbers of foreign visitors allowed to attend the annual Haj pilgrimage.“These and other locations, including major tourism hubs in the UAE and Oman, are redoubling their efforts to promote their tourism offer in major export markets in Europe and Asia, as well as reassuring visitors through high-level health and security measures,” EIU said.Domestic tourism, it said has supported a depressed market in recent years and this will continue to be an important outlet for the tourism sector, along with regional arrivals.International arrivals to the GCC were back on an upswing and accelerated quickly in late 2021 and in 2022, and looking ahead they will be aided by vaccine rollout and safety measures, lighter travel restrictions, a further promotional drive and the release of pent-up demand for travel and tourism.In the longer term, travel, tourism and hospitality are identified as key ingredients of strategic growth plans and consequently are subject to pro-business and pro-investment reforms as well as receiving substantial investment from the public and private sectors, EIU noted.In the report, EIU said business conditions across the Middle East will differ greatly by country in 2023. Business conditions in the GCC states will be the most favourable in the region, supported by buoyant energy sectors, the recycling of oil funds into the wider economy and ongoing business and economic reform programmes.Strong purchasing managers’ indices (PMIs), which record business activity in the non-oil private sector with a 50 threshold that separates expansion from contraction — for most GCC states are suggestive of relative health and momentum of non-energy private business sectors in the short term.Competition between Saudi Arabia and the UAE to establish leading business hubs will intensify, although this will also create space for co-operation and joint ventures given the scope for mutual benefit and the pragmatic nature of intra-GCC business investment.“GCC states will continue to push for openings in new sectors and to attract foreign private investment, which will be supported by well-capitalised, profitable and strong financial sectors and already enacted pro-business reforms,” EIU said.
Beyond the Tarmac Fuel is one of the main operational cost items for an airline, typically accounting for 20-25% of the total. As a result of the Russia-Ukraine conflict, there has been a sharp rise in the world oil price, which returned to more than $100/barrel for the first time since 2014.The jet crack has also widened considerably this year, according to the global body of airlines – IATA.Jet crack or crack spread, is a term used in the energy markets to represent the differences between crude oil and the prices of the wholesale petroleum products that derive from it, such as jet fuel.Looking forward, the International Air Transport Association (IATA) expects oil prices to moderate somewhat over the forecast horizon, easing to around $92 a barrel in 2023, from around $102 this year.Notwithstanding the anticipated moderate price decline, the ongoing recovery in traffic volumes will result in the industry’s fuel bill increasing to around $229bn in 2023.Notwithstanding the anticipated moderate price decline the total fuel spend for 2023 is expected to be $229bn in 2023 — consistent at 30% of expenses. This is on account of greater demand for jet fuel because of the ongoing recovery in traffic volumes.IATA’s forecast is based on Brent crude at $92.3/barrel (down from an average of $103.2/barrel in 2022). Jet kerosene is expected to average $111.9/barrel (down from $138.8/barrel). This decrease reflects a relative stabilisation of fuel supply after the initial disruptions from the war in Ukraine. The premium charged for jet fuel (crack spread) remains near historical highs.Passenger demand is expected to reach 85.5% of 2019 levels over the course of 2023. Much of this expectation takes into account the uncertainties of China’s zero-Covid policies, which are constraining both domestic and international markets. Nonetheless, passenger numbers are expected to surpass the 4bn mark for the first time next year (since 2019), with 4.2bn travellers expected to fly.For airlines, the challenge of elevated fuel prices in 2023 will be the extent to which the costs can continue to be passed on to consumers or, if demand begins to wane, how to manage the still considerable cost burden given the outlook for a very modest profit margin.Overall airline costs are expected to grow by 5.3% to $776bn. That growth is expected to be 1.8 percentage points below revenue growth, thus supporting a return to profitability. Cost pressures are still there from labour, skill and capacity shortages. Infrastructure costs are also a concern.Nonetheless, non-fuel unit costs are expected to fall to 39.8 cents/available tonne kilometre (down from 41.7 cents/ATK in 2022 and nearly matching the 39.2 cents/ATK achieved in 2019). Airline efficiency gains are expected to drive passenger load factors to 81.0 %, just slightly below the 82.6% achieved in 2019.Higher energy consumption around the world also results in higher emissions.Transportation accounts for around 15% of global CO2 emissions, of which two thirds stem from road transport and one third from maritime and air transport in roughly equal parts, i.e. approximately 2.5% of global emissions each - close to the share of Germany it total emissions.While it is necessary to reduce all CO2 emissions, it is also important to be aware of the relative size of their various origins, as this can help set the policy agenda and allow for the optimisation of the pace and sequencing of reform.Today, the technology is available for scaling up the production of sustainable aviation fuel (SAF), while its current production meets less than 1% of total jet-fuel consumption, IATA noted.Rapid expansion of such production will likely require both public and private investments. Lifting the production to 10% of jet fuels could require $250bn in investments. If that sounds prohibitive, let us ponder the extent of fossil-fuel subsidies.The OECD and the International Energy Agency have analysed some 51 countries representing 85% of the world’s total energy supply and found that subsidies that kept fossil fuel prices artificially low more than tripled to $531bn in 2021, compared with 2020.Subsidies for oil and gas production reached a record level of $64bn in 2021, IATA data reveal. Hence, were those funds instead allocated to SAF production, one could reach almost 25% of current jet-fuel consumption.Or, with only the production subsidies given in a single year, SAF could be brought to 2.6% of jet-fuel consumption.Clearly, removing harmful fossil-fuel subsidies should be at the top of policymakers’ agenda.
Thousands of World Cup fans to Qatar can easily meet their forex needs as exchange houses across the country have sufficient stocks of all major currencies, sources said Tuesday.“Qatar Central Bank has ensured that no visitor from abroad faces difficulty in obtaining forex, especially major currencies such as dollar, pound and euro,” an exchange house official told Gulf Times.Since the FIFA World Cup Qatar 2022 kicked off, there has been increasing needs for foreign currency, mostly from visiting football fans, noted K N S Das, Trust Exchange general manager.“We have been able to meet their needs. We have seen greater demands for Qatari riyal and other major currencies since mid-November,” Das told Gulf Times Tuesday.An industry source said he has not heard of any major issues such as currency shortage since the commencement of the greatest sporting spectacle in Qatar on November 20.Although the purchase and sale of foreign currencies by the exchange houses moderated during 2020 with sales exceeding purchases in view of the pandemic, the situation will have improved in 2021 and this year.The decline in remittances also contributed to the moderation in salesand purchases of foreign currencies that year.But the opening of borders and resumption of air travel meant a huge demand for foreign currency, which is now felt in exchange houses across the country.A resident told Gulf Times that during the summer vacation this year he was not able to get dollar from currency traders at the airport.“But that situation has changed now. Foreign currency is now available, which is helping football fans from across the globe,” he said.Qatar is hosting the most compact edition of FIFA World Cup in modern history. All eight stadiums are within one hour’s drive of central Doha, meaning fans and players will always be in the thick of the action.This year’s tournament, which culminates on December 18 – Qatar’s National Day – is the 22nd edition of international football’s showpiece event – and the first to take place in the Middle East.