Oman’s economy to slow in 2023 but inflation is tamed

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Oman’s real gross domestic product (GDP) growth is anticipated to slow down to 1.3 percent in 2023 but rebound to 2.7 percent in 2024, the International Monetary Fund (IMF) said in a statement.

The projections are based on oil production cuts by Opec+, moderate growth in the non-hydrocarbon sector due to recovering but still subdued construction activity, a slowdown in global economic activity and tighter financial conditions.

The country’s real GDP grew by 4.3 percent in 2022.

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Non-hydrocarbon growth is projected to increase to 2 percent in 2023 and 2.5 percent in 2024, from 1.2 percent in 2022.

Headline inflation reduced from 2.8 percent year-over-year in 2022 to 1.1 percent by April 2023, reflecting lower food inflation and a stronger US dollar.

The fiscal balance reached a surplus of 7.5 percent of GDP in 2022 and is expected to remain in surplus over the medium term on the back of favourable oil revenues and fiscal measures under the authorities’ medium-term fiscal plan.

Buoyed by oil and non-oil exports, the current account in 2022 recorded its first surplus since 2014, at 5.2 percent of GDP and is projected to remain in surplus over the medium term.

The IMF said that Oman’s banking sector remains sound.

Profitability has recovered from pandemic lows, with banks having ample capital and liquidity buffers. In addition, asset quality remains strong and credit to the private sector continues to expand.

“Oman economy’s near- to medium-term outlook is favourable and the risks to the outlook are balanced,” the IMF noted.