Muscat: Since His Majesty Sultan Haitham bin Tarik’s accession day, the Omani economy achieved a remarkable growth, thanks to efforts to diversify the economy, enhance non-oil revenues, and expand the productive base of the economy. These efforts have contributed to supporting the GDP growth, attracting more investments, and stimulating the private sector.

With the prime aim of restoring the financial balance between revenues and expenditures in the medium term and reduce the financial deficits in the state’s general budget, the government launched a medium-term plan (2020-2024). This plan included a number of financial initiatives and policies related to supporting economic growth, activating and diversifying sources of government revenues, rationalizing and raising the efficiency of government spending, strengthening the social protection system, and raising the efficiency of public finance.

The government’s efforts to implement the plan have resulted in establishing strong foundations and rules to achieve financial sustainability and ensure long-term financial stability. In continuation of these efforts, the National Program for Financial Sustainability and Financial Sector Development (2023-2025) is working to establish a vibrant, strong and innovative financial sector that provides diverse financing solutions to target groups to enable economic growth and achieve balanced and sustainable development led by the private sector.

The Omani private sector is the main player in economic development efforts and GDP growth in various sectors, especially those relied upon for economic diversification. The private sector has begun to back efforts that aim at augmenting the national economy by exploring opportunities offered through incentive initiatives, such as the National Program for Private Sector Development and Foreign Trade “Nazdaher” initiative, and incentive and financial sustainability initiatives, along with enhancing partnership with the government sector.

Many strategic projects were implemented in various governorates of the Sultanate of Oman, especially the Duqm Refinery Project and the petrochemical industries in the Duqm Special Economic Zone, the Central Market for Vegetables and Fruits Project “Silal” in Khazaen Economic City in the Wilayat of Barka, the Fish Canning and Value-Added Complex in Duqm, in addition to a number of projects in the field of renewable energy.

As far as the public debt file in the Sultanate of Oman is concerned, it has witnessed positive developments as a result of implementing a set of government measures and initiatives that have contributed to rationalizing and raising the efficiency of spending, and increasing non-oil government revenues, in addition to the rise in oil prices. Thus, the public debt balance decreased to about RO 14.4 billion, or 34 percent of the GDP at the end of 2024, compared to RO 19.8 billion, or 67.9 percent of the GDP at the end of 2020.

Regarding the credit rating of the Sultanate of Oman, the credit rating of the Sultanate of Oman by major international rating institutions has witnessed a noticeable improvement during (2021-2024). This is attributed to the improvement in oil prices, in addition to introducing financial performance control measures and initiatives within the framework of the medium-term financial plan, the reduction in public debt risks and the improvement in financial and economic performance.

Standard & Poor’s raised its rating from (+B) in 2020 to (BBB-) with a stable outlook in 2024, thus restoring investment attraction status. Fitch also raised its rating from (-BB) in 2020 to (BB+) with a positive outlook in 2024, while Moody’s raised its rating from (Ba3) in 2020 to (1Ba) with a positive outlook in 2024.

As for the economic and financial indicators of the Omani economy, statistics showed that it recorded a remarkable growth during the past five years. The GDP at current prices reached about RO 40.7 billion in 2023, exceeding the average target value of about RO 29.5 billion during the years of the tenth five-year development plan (2021-2025) by 38 percent. This comes as a result of the growth recorded by oil activities at an average rate of 27.8 percent and the growth of non-oil activities at an average rate of about 6.2 percent during (2021-2023).

The growth achieved by both oil and non-oil activities exceeded the average targeted growth during the plan years (2021-2025), which amounted to about 5.5 percent and 5.7 percent for each, respectively.

This growth is attributed to the increase in the actual average price of Omani crude oil to reach about $80.7 per barrel during (2021-2023), an increase of 75.4 percent over 2020 prices and 68.1 percent over the approved average oil price during the plan years, which amounted to $48 per barrel. This growth is also due to the recovery of economic activities from the effects of the pandemic as a result of the policies, measures and initiatives taken by the Sultanate of Oman to mitigate the negative repercussions and effects of the pandemic on economic sectors.

As a result of developments in the GDP at current prices, the average per capita share of GDP at current prices increased by an average of about 7.1 percent to reach about OMR8 thousand during (2021-2023) compared to RO 6.5 thousand in 2020, thus exceeding the targeted average during the plan years, which amounted to about RO 6 thousand.

During the first nine months of 2024, the GDP at current prices grew by about 2.7 percent compared to the same period in 2023, as a result of the growth of non-oil activities by 4.2 percent and the growth of oil activities by a slight 0.3 percent. This is due to the increase in the average price of Omani crude oil during the period (January-September) of 2024 by 3.5 percent to reach 82.6 US dollars per barrel compared to 79.9 US dollars per barrel during the same period in 2023.

The government’s economic forecasting team expects nominal GDP to grow by 3.4 percent in 2025.

The GDP at constant prices also recorded a growth to reach about RO 37.7 billion in 2023, exceeding the targeted value of about RO 30.98 billion on average during the plan years (2021-2025). The average growth rate achieved during (2021-2023) of 3.9 percent exceeded the targeted average growth during the plan years (2021-2025) of 3.5 percent.

This growth came as a result of the remarkable rise recorded by non-oil activities, with an average rate of about 4.2 percent, as well as the rise of oil activities, with an average rate of about 3.9 percent during (2021-2023). The growth achieved by both non-oil activities and oil activities exceeded the average targeted growth during the plan years (2021-2025), which amounted to about 3.2 percent and 3.5 percent for each, respectively.

By the end of September 2024, the GDP at constant prices grew by 1.9 percent compared to the same period in 2023, as a result of a 4.2 percent growth in non-oil activities and a 2.8 percent decline in oil activities. This growth came despite a 5.1 percent decline in average daily oil production during the first nine months of 2024, reaching 994,000 barrels, compared to 1.05 million barrels during the same period in 2023, as a result of the recovery of non-oil activities.

The government’s economic forecasting team also expects real GDP to grow by 2.7 percent in 2025, while the International Monetary Fund expects GDP at constant prices to grow by 3.1 percent in 2025.

Meanwhile, the total investment increased from about RO 7.97 billion in 2020 to RO 10.9 billion in 2023, i.e. an average growth rate of 11.7 percent during (2021-2023). Although it grew at the same pace as GDP, its ratio to GDP on average during (2021-2023) remained at its level achieved in 2020, which amounted to 27.3 percent, and it exceeded the target rate during the plan years (2021-2025), which amounted to about 26.5 percent.

Regarding the private sector’s contribution to total investments, it averaged about 49.3 percent during (2021-2022), which is still below the target percentage during the plan years (2021-2025), that amounts to about 60 percent. This requires more efforts to boost the role of the private sector in economic activity and enable it to reach the targeted contribution to total investments.

The average inflation rate, measured by the consumer price index, during (2021-2023) amounted to about 1.7 percent, compared to its level with a negative inflation rate of 0.4 percent in 2020, which affirms the stability of inflationary pressures at comfortable, safe and acceptable rates.

The average achieved inflation rate is also lower than the target average in the plan, which is about 2.8 percent, as a result of the continued efforts of global central banks to contain inflation in addition to government measures to mitigate inflation, the most important of which was fixing fuel prices according to the prices of October 2021 and supporting basic foodstuffs. The inflation rate decreased to about 0.6 percent during the period from January to November 2024, compared to 1 percent during the same period in 2023.

Monetary and banking indicators witnessed an improvement in their performance during the past period of the Tenth Five-Year Development Plan, as local liquidity increased during (2021-2024) by an average of 7.7 percent to reach RO 24.8 billion at the end of October 2024, compared to OMR19.3 billion at the end of 2020. The total deposits in the banking sector also increased by an average of 8.1 percent to reach RO 31.9 billion at the end of October 2024, compared to RO 24.2 billion at the end of 2020. The total credit balance granted by banks operating in the Sultanate of Oman also increased by an average of 4.6 percent to reach RO 31.9 billion at the end of October 2024, compared to RO 26.7 billion at the end of 2020.

On the other hand, Muscat Stock Exchange index rose by an average of 5.4 percent to reach 4563 points at the end of October 2024 trading, compared to about 3659 points at the end of 2020.

The current account within the balance of payments witnessed a remarkable improvement during (2021-2023), as it was able to achieve a surplus of RO 2.2 billion and RO 1.01 billion, or 5 percent and 4 percent of the GDP in 2022 and 2023, respectively, compared to a deficit of RO 4.8 billion, or 16.5 percent of the GDP in 2020 and 2021.

This is mainly attributed to the rise in oil prices in 2022 and 2023 compared to their levels in 2020 and 2021, which resulted in an increase in the value of oil exports and the increase in demand for non-oil exports by major trading partners. The current account performance exceeded its target performance at the end of the plan, achieving a surplus of 5 percent and 4 percent of GDP in 2022 and 2023, respectively, compared to a targeted deficit of 5.5 percent of GDP at the end of the plan.

The trade balance also witnessed an improvement in its performance during (2021-2023), as its surplus increased by a significant percentage, averaging 104.4 percent, to reach OMR7.8 billion, or 18.6 percent of GDP in 2023, compared to OMR1.5 billion, or 5.1 percent of GDP in 2020. This improvement came as a result of the growth of commodity exports by an average of 26 percent and the growth of commodity imports by 12 percent.

This is mainly due to the improvement in crude oil prices and the recovery of economic activities. It is worth noting that although the contribution of non-oil exports to total commodity exports increased to about 32.8 percent in 2023 compared to 28.1 percent in 2020, oil exports still dominate commodity exports at a rate of 61 percent in 2023.

The trade balance surplus increased during the period from January to October 2024 by 3.4 percent to reach about OMR6.6 billion, as a result of the growth of commodity exports by 8.7 percent and the growth of commodity imports by 11.4 percent; which shows an improvement in the performance of the trade balance compared to its level during the same period in 2023; as a result of the rise in oil prices.

Regarding foreign direct investment, the cumulative value of foreign direct investment at the end of 2023 amounted to about OMR25.4 billion, compared to OMR14.3 billion at the end of 2020, i.e. an average growth of 21.3 percent during the period (2021-2023).

Foreign direct investment flows in 2023 amounted to about OMR4.8 billion, compared to OMR900 million in 2020, an average increase of 121 percent during (2021-2023).

This is due to the ongoing work to improve the business and investment environment, and the provision of incentives aimed at attracting more investments and localizing them through many programs, the most important of which are the Private Investment Attraction Program and the Investor Residency Program.

Foreign direct investment flows during (2021-2023) constituted an average of 9.5 percent of the gross domestic product at current prices, which is close to reaching the target rate of about 10.9 percent at the end of the plan.

The cumulative value of foreign direct investments in 2024 amounted to about OMR26.7 billion, with inflows amounting to about OMR3.9 billion compared to the same period in 2023.

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