Oman back on path to strong economic growth

Muscat: A gradual recovery for Oman’s economy is forecasted, following a period of on-and-off COVID-19 restrictions, according to a new report.

“The non-oil sector activity and rising oil output should result in gross domestic product (GDP) growth of 2.1 per cent for the Sultanate, following an estimated contraction of 5.8 per cent in 2020,” the latest Economic Insights: Middle East report for the third quarter of 2021, from Oxford Economics, forecasts.

The report, commissioned by ICAEW, states that an increase in vaccination rates and the expansion of Oman’s vaccination drive have facilitated the lifting of restrictions, leading to the economy opening up.

“Vaccination is now mandatory in many settings across the country such as hypermarkets, commercial establishments, coffee shops and restaurants, to help contain the spread of the virus,” the report said.

In September Oman’s tourism sector re-opened its borders to fully vaccinated tourists, giving an encouraging outlook for tourism, even as mandatory quarantine remains in place. Entertainment and hosting venues nationwide have also stepped up efforts to capture domestic audiences, driving occupancy above 2020 levels.

Overall, ICAEW’s report forecasts non-oil GDP growth of 2.4 per cent in 2021 and 3.1 per cent in 2022 for Oman’s non-oil sector, which is expected to return to its pre-pandemic levels in 2023.

“While the non-oil sector gradually picks up and Oman’s economy reopens to foreigners, efforts are underway to create more public sector positions and replace foreign workers with Omani citizens, but a full recovery in the labour market will take time,” Michael Armstrong, ICAEW Regional Director for the Middle East, Africa and South Asia, said.
“New wage subsidies, announced in response to recent protests and offered to private companies for new local hires, should offer some support in the near term and encourage stronger domestic spending,” he added.

According to the report, Oman’s oil sector is gradually recovering as OPEC+ cuts are tapered, with output rising by up to 1.2 per cent this year and next. Gas production is also on the rise as daily production at the key fields of Ghazeer and Khazzan see an increase to 1.5 billion cubic feet from one billion cubic feet, further aiding overall GDP recovery.