- ECONOMIC IMPACT -

Latest update: 16 November

GlobalData forecasts that the world economy will grow at a slower pace of 3.1% in 2022 following a 5.9% growth in 2021. In addition, the global inflation rate is projected to rise to 8.4% in 2022 from 3.5% in the previous year due to supply chain disruption amid the Ukraine-Russia war.

The GCC nations are forecast to grow at their fastest pace in years on higher hydrocarbon prices. Among the six GCC nations, Kuwait is projected to be growing the fastest with real GDP forecast at 8.2% in 2022, followed by Saudi Arabia (7.6%), Oman (5.7%), UAE (5.5%), Qatar (4.4%), and Bahrain (3.3%).

- SECTOR IMPACT: TRAVEL AND TOURISM -

Latest update: 16 November

Revenue impact

With no end to the conflict in sight, fuel prices will continue to surge for airlines. This will negatively impact their bottom lines, unless they pass the full additional cost on to the traveller, which could reduce demand in an industry where consumers can easily find substitute services.


For example, American Airlines is forecasting fuel costs to increase between $3.92 to $3.97 per gallon, increasing $0.33 per gallon from the previous estimate of $3.59 to $3.64. Increasing fuel costs means that airlines cannot optimise performance and their post-Covid-19 recovery timelines will be extended as a result. 


Aeroflot, Russia’s flagship airline, has seen its revenue cut dramatically. It is now planning to raise up to $3bn in an emergency share issue.

Travel enters a new era

Low tourist demand means many cars rental companies have been forced to sell their fleets in order to stay afloat during the Covid-19 pandemic.


Markets in which airport pickup is the largest channel, such as the US, have particularly suffered, but the effect has been felt all over the world.


But as demand picks up, with more people traveling and supply still down, major price hikes are likely to be in store for anyone who wants to rent a car.

Key Travel And Tourism  developments

According to GlobalData, in 2021, combined outbound tourist expenditure from Russia and Ukraine accounted for 3.5% of total global outbound tourist expenditure. A significantly reduced number of travellers from both countries will be taking trips internationally in 2022, which will contribute to an uneven tourism recovery from the pandemic.


Russia was the fifth-ranked country globally in terms of international departures in 2021, with 13.7 million. Additionally, travellers from this nation spent a total of $22.5bn in 2021, which put Russia in the top 10 globally for total outbound tourist expenditure.

SANCTIONS

In 2022, Thailand is set to fully reopen its borders to international tourists with no need for a negative pre-departure PCR test. Additionally, it has not placed any restrictions on Russia concerning the ongoing geopolitical crisis with Ukraine and has a tourism product that is naturally attractive to Russian travellers. These factors will likely combine to create a stiff year-on-year increase in Russian visitation to Thailand in 2022.


In May 2022, Thailand’s Minister of Commerce stated that Thai banks had displayed interest in Russia’s proposal to introduce the MIR payment system for Russian travellers in Thailand and pledged to coordinate with the appropriate Tourism and Transport ministries to facilitate direct flights from Russia


Under mounting pressure from Western sanctions, Aeroflot, Rossiya Airlines, Ural Airlines, and Russian Railways have seen their revenue cut dramatically. Aeroflot, Russia's flagship airline, is now planning to raise up to $3bn in an emergency share issue. Passenger numbers for Aeroflot are down 8.2% YoY in the first nine months of 2022.

Travel enters a new era

Low tourist demand means many cars rental companies have been forced to sell their fleets in order to stay afloat during the Covid-19 pandemic.


Markets in which airport pickup is the largest channel, such as the US, have particularly suffered, but the effect has been felt all over the world.


But as demand picks up, with more people traveling and supply still down, major price hikes are likely to be in store for anyone who wants to rent a car.

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