Oman's economic recovery is continuing, the International Monetary Fund (IMF) said on Thursday, adding that while it expects growth to rebound in 2024 after a slowdown this year on the back of oil production cuts, reforms need to continue.
GDP growth in the wider Gulf region is expected to slow in 2023 to 1.5%, the IMF said in October in its latest regional update, as oil GDP declines on lower crude production and prices. But overall growth is forecast to reach 3.7% next year.
After a visit to Oman, the IMF forecast its GDP growth would be 1.3% this year, from 4.3% in 2022. Last month it forecast Oman's growth to recover to 2.7% in 2024, buoyed by higher hydrocarbon output and strong non-oil growth.
"Nevertheless, the outlook is subject to high uncertainty, including from oil price volatility, global economic and financial developments, and potential indirect spillovers from the ongoing conflict in Gaza," it said in a statement.
Oman, a relatively small crude producer, is more sensitive than its Gulf neighbours to oil price swings and remains primarily reliant on hydrocarbon revenue, although all regional economies are investing in economic diversification plans.
It launched a medium term fiscal programme in 2020 to reduce public debt, diversify revenue sources, and spur economic growth, which, combined with a big oil windfall last year, has improved public finances.
"Sustaining the momentum of fiscal reforms remains, however, key to entrenching fiscal sustainability and ensuring intergenerational equity," the IMF said, with implementation of planned taxes and energy subsidy reform both still priorities.
Oman was upgraded by credit rating agencies earlier in 2023.
(Reporting by Nayera Abdallah and Rachna Uppal; Editing by Gareth Jones and Alexander Smith)