Qatar's 2023 public spending to rise modestly on higher Brent forecast: Oxford Economics

Qatar's public spending will rise modestly this year based on higher Brent forecast of $86 per barrel against the budgeted $65 per barrel, Oxford Economics has said in a report.
Public spending will rise modestly this year, Oxford Economics said and noted the country’s 2023 budget, based on an oil price $65/b, up
from assumed $55 in 2022 budget, projects a surplus of QR29bn, equivalent to 3.4% of GDP.
“Our forecast for Brent is at $86pb in 2023, significantly above the budgeted price. On that basis, we anticipate a modest rise in spending, in contrast to the reduction pencilled in the budget.
But we still expect a surplus of 9.7% of GDP next year,” Oxford Economics said.
Crude production will rise modestly in 2023, it said. Qatar is not involved in the Opec+ agreement on production quotas, and output will likely rise further above 600,000 bpd this year.
Production slid by 0.6% last year, undershooting researcher’s expectations of a modest rise.
The gas sector is a priority. Recent LNG deals awarded for the North Field gas expansion project will have a positive medium-term impact, facilitating an increase in LNG capacity by almost 65% to 126mtpy by 2027, from 77mtpy.
This includes multi-year supply agreements with China and Germany for LNG output set to be added in the first phase of the project due in 2026.
Non-oil sector recovery will slow in 2023 after a strong 2022. The non-oil sector is likely to have expanded by 6% in 2022, marking the fastest pace since 2015.
However, this is weaker than the 7.6% pace Oxford Economics had projected previously, given historical data revisions.
Recent data showed oil activities expanded by 6.5% in Q2, 2022, down from 9.7% in the previous release.
The pace will slow to 3.3% in 2023 as momentum eases with the conclusion of the FIFA World Cup Qatar 2022. But this will still be stronger than the 2.7% expansion in 2021, which followed a decline of 4.7% in 2020, the researcher noted.
Inflation dropped by1.8% m/m in January, following the end of the
World Cup, leaving annual inflation at 4.2%, markedly slower than the 5.9% rise in December.
Some of the key drivers behind the earlier rise in the headline, particularly recreation and culture prices, are now reversing. Although the decline is being offset by further rises in housing and
transport prices, the drop in January inflation was larger than the researcher anticipated, prompting it to cut its 2023 CPI projection by 0.9ppts, to 2.3%.
This is less than half the average pace of 5% in 2022, it said.