In its last report to the Sultanate, the International Monetary Fund (IMF) predicted that Oman’s economy will increase by 2.7% in 2024 but only by 1.3% in 2023.
The predictions take into account OPEC+’s cuts to oil output, a slowdown in global economic activity, tighter financial conditions, and moderate growth in the non-hydrocarbon sector as a result of improving but still tepid construction activity.
In 2022, Oman’s real GDP increased by 4.3%, largely due to a robust rise in the hydrocarbon sector.
However, it is anticipated that non-hydrocarbon growth will increase from 1.2% in 2022 to 2% in 2023 and 2.5% in 2024.
Due to lower food inflation and a stronger US currency, headline inflation in Oman decreased from 2.8% in 2022 to 1.1% by April 2023.
According to the IMF, the banking industry is healthy, and profitability has increased from pandemic lows. Banks exhibit large capital and liquidity reserves, while credit to the private sector keeps growing, and asset quality remains high.
“The near- to medium-term outlook is favourable and risks to the outlook are balanced,” the statement said.
The Duqm refinery project’s faster production, another spike in oil prices, the acceleration of the Vision 2040 reform initiatives, and an increase in foreign direct investments from regional partners will all positively impact growth and fiscal and external positions, the statement added.
The analysis identified three main threats to the outlook: pressure to spend the oil windfall, a sudden reduction in oil price brought on by a severe and lengthy global economic slowdown, and lower demand for hydrocarbons as a result of a quicker-than-anticipated global energy shift.