Oman’s economy is on a solid path to recovery: WorldBank

Muscat: The World Bank said in a new report on GCC Economic Update, that After a difficult 2020, Oman’s economy is on a solid path to recovery amid easing of pandemic pressures, higher hydrocarbon outputs and wide-ranging government reforms.

The report said, front loaded fiscal reforms, including VAT, and cuts in spending are expected to turn the country’s fiscal and current account deficits into surpluses, starting from 2022. Downside risks include any resurgent pandemic pressures, volatility in oil prices, and slower implementation of the government’s reform program. On the upside, rising hydrocarbon production, improved non-oil revenues, and the rationalization of expenditure could strengthen fiscal and external positions.

The report also indicated: Oman’s economy is recovering gradually from the dual impact of the pandemic and the temporary collapse in oil prices it caused. Estimates suggest that the country’s overall growth reached 2.1 percent in 2021. Hydrocarbon GDP grew by an estimated 2.2 percent, driven by higher oil production due to the easing of OPEC + cuts and the coming on stream of a new liquified gas plant in mid-2021.

The report added, Non-oil GDP is estimated to have rebounded by almost 2 percent in 2021, signaling the recovery of domestic and external demand, aided by increased vaccine penetration that boosted the sectors most impacted by the pandemic (tourism, hospitality, and retail). Annual inflation switched from negative territory in 2020 and picked up to an average of 1.5% in 2021, due to the introduction of VAT last April and to improved domestic demand.

Oman’s economy is expected to improve gradually and to strengthen in the medium-term, supported by higher oil and gas production and ongoing structural reform. Growth is project to pass 5 percent in 2022, underpinned by more than 8 percent growth in the hydrocarbon sector, boosted by the increased production of liquified of natural as in the key Gazeer and Khazzan fields. The country’s non-oil economy will continue to grow, exceeding 2 percent in 2022, as fast vaccine rollout strengthens domestic activity. Over the medium-term, growth will decelerate to an average of 2.7% per year in 2023-2024, while the hydrocarbon sector will remain the main driver of growth, the report said.