The International Monetary Fund recently said that Oman’s economic recovery is gaining traction and is projected to grow at 4.3% in 2022. In a statement, the multilateral agency said, “Strong vaccination efforts have allowed for the relaxation of all social distancing restrictions. Overall GDP growth rebounded from -3.2% in 2020 to 3.0% in 2021, and is projected at 4.3% in 2022, supported by increased hydrocarbon production and continued recovery of non-hydrocarbon economic activity”.
High oil prices and fiscal consolidation under the authorities’ Medium-Term Fiscal Plan (MTFP) have improved fiscal and external balances considerably. According to the report, increased oil revenue, expenditure restraint, and the implementation of VAT all contributed to an improvement in the total central government balance of 12.8 basis points of GDP to a deficit of 3.2% in 2021.
As a result of improving governmental finances, fiscal and external surpluses are anticipated in 2022. According to the report, the central government debt dropped to 62.9% of GDP in 2021 and is predicted to drop to roughly 44% of GDP in 2022.
Due to managed prices and restrictions on specific fuel prices, Oman’s inflation has so far been kept in check. Oman’s average inflation is anticipated to reach 3% in 2022, “given the relatively high dependence on imports and large weight of tradable items in the CPI basket.”
The GCC member started a number of structural reforms under Oman Vision 2040 and is likely to press forward on those measures.
Key priorities include enhancing labor market flexibility, boosting female employment, improving the business environment, advancing SOE reforms, leveraging digitalization, and continuing the implementation of green initiatives.