Deceleration Foreseen in Oman’s Economic Growth Mainly Due to Oil Output Cuts

In a new development signaling a shift in Oman’s economic landscape, global credit rating agency Standard & Poor has upgraded the nation’s long-term credit rating from “BB” to “BB+.” The agency predicts a deceleration in economic growth by 1 % in 2023, mainly attributed to reductions in oil production. Nonetheless, the dip in oil output is anticipated to be counterbalanced by a surge in condensate and gas. In the non-hydrocarbon sector, Oman is projected to witness a 2 % increase in 2023, with hydrocarbon manufacturing expected to rally in 2024 and 2025.

S&P Global’s assessment underscores a transformation in Oman’s non-oil sector, promising substantial growth in the years ahead, particularly between 2023 and 2026. This shift is expected to play a pivotal role in enhancing the country’s financial prosperity. Furthermore, government fiscal and economic momentum is set to continue until 2026, forecasting an average of 2 % year-on-year growth in the country’s gross domestic product, according to the agency. “Oman’s economy depends on the oil sector, which accounts for about 30 % of GDP, 60 % of goods exports, and 70 % of government fiscal receipts. This dependence weighs on our assessment of its fiscal and external resilience, and we reflect this in the rating,” the report stated.

Moreover, the banking sector witnessed a marked boost in credit balance, registering a growth of 5.3 % in July 2023 compared to the same month the previous year. Data from the nation’s central bank indicates that credit extended to the private sector surged by 5.2 % by the end of July 2023, totaling 20.2 billion Omani rials (US$52.47 million). Highlighting another significant sector, Oman’s tourism industry is poised for expansion over the upcoming years. Its contribution to the GDP is projected to rise to 2.75 %, up from 2.4 % in 2023, according to Oman’s Minister of Heritage and Tourism. In a statement to Oman News Agency, Salim Al-Mahrouqi detailed that the tourism industry was responsible for 1.07 billion Omani rials (US$2.78 million) of the comprehensive 1.9 billion Omani rials (US$4.94 million) revenue in 2022.