Central Bank of Oman sees favourable outlook for economy
The Central Bank of Oman (CBO) has confirmed that the outlook for Oman's economy remains favourable, with the Sultanate's economy expected to experience further growth and continue expanding.
In its 2023 annual report CBO says this is made possible to ongoing improvements under the strategic direction of Oman Vision 2040, favourable energy prices, and recovery in the non-oil sectors of the country.
CBO notes that domestic inflation remained low in 2023 due to prudent fiscal and monetary policies adopted by the Government. It highlighted that both financial and external balances posted significant surpluses in 2023, with public debt significantly reduced compared to 2022.
The report indicates that real GDP grew by 1.3% in 2023, down from 9.6% in 2022, largely due to production cuts agreed by OPEC+, which resulted in oil GDP growth of just 0.4%. In contrast, non-oil GDP grew by 2.4% in real terms.
CBO explains that non-oil GDP growth in 2023 was mainly driven by agriculture and fisheries, which grew by 6.9%, and the services sector, which grew by 3.5%. Non-oil industrial activities declined by 0.4%.
It says Oman saw a notable decline in inflation in 2023, benefiting from its monetary policy framework, fixed exchange rate regime, and fiscal measures. Inflation stood at 0.9%, down from 2.5% in 2022.
The CBO report says Oman's fiscal position continued to improve in 2023, with comfortable surpluses, supported by favourable oil prices, effective policy measures and improved fiscal discipline.
It notes that the Government achieved a fiscal surplus of 2.2% of GDP in 2023, reducing public debt to 36.0% of GDP, down from 40.2% in 2022. Oman’s credit rating showed positive and continuous improvement throughout 2023.
The CBO annual report says Oman’s external performance remained robust in 2023, with positive growth in the trade balance and improvements in both services and primary income accounts.
This contributed to a continued surplus in the current account, while the services account deficit fell by 23.6%, and primary income improved due to reduced debt in direct investment income. The current account recorded a surplus of OMR 1.014 billion in 2023.
The financial account saw an increase in net outflows and net lending of OMR 1.227 billion in 2023, largely reflecting higher debt repayments by the government and corporations.
The report emphasises that Oman’s macroeconomic outlook remains favourable, driven by continued improvements under Oman Vision 2040 and favourable energy prices, which are expected to sustain fiscal and external surpluses.
Oil prices are expected to remain at favourable levels, providing crucial support to oil activities, while non-oil growth is projected to gradually rise to 3% over the medium term, supported by global demand recovery, ongoing reforms, and the attraction of significant investment projects in non-oil sectors.
Oman’s fiscal position is expected to improve further in 2024, backed by favourable oil prices and fiscal consolidation measures, which have positively impacted the country’s financial and external positions.
This is an unofficial English version of an Arabic report. To view the official Arabic text, click here.