Oman’s economy on track for stable, steady growth

Several macro fundamentals have aligned to give the Sultanate a clear path to post-pandemic recovery.

Oman’s economic future looks bright, propelled by high commodity prices, a FIFA World Cup-related boost, and overall upbeat business and consumer sentiment in the Sultanate.

Investors are taking note of the improved prospects. Moody's Investors Service changed its outlook on the Government of Oman's issuer rating to positive from stable, and affirmed its long-term issuer and senior unsecured ratings at Ba3. The ratings agency also affirmed Oman's (P)Ba3 senior unsecured medium-term note programme rating.

“The change of outlook to positive reflects the strengthening of Oman's debt burden and debt affordability metrics during 2022, mainly as a result of elevated oil prices, and the prospect that this improvement could be sustained in the medium term,” Moody’s said. It added that oil prices are expected to remain elevated for the next few years, which affords the government additional time to advance its fiscal and economic reform agenda.

Oman’s keen attention to renewable energy is emerging as a key growth area. A focus on hydrogen energy and low-carbon manufacturing should also add a new dimension to its economy. Indeed, investment in green growth could help GCC GDP expand to over USD 13 trillion by 2050, according to the World Bank.

Oman’s economy is expected to expand by 4.5% in 2022 before moving to an average of 3.2% in 2023 and 2024, according to the World Bank.

“The Sultanate’s economy is projected to continue its recovery and strengthen over the medium-term, driven by robust energy prices, expansion of oil and gas production, and wide-ranging structural reforms,” the World Bank said in its new Gulf Economic Update.

The bank expects the country’s fiscal deficit to turn into a surplus of nearly 6% of GDP in 2022 – the first surplus in almost a decade – as oil receipts and non-oil exports soar, in turn reducing gross financing needs.