Oman

High oil prices, continued fiscal consolidation and determined implementation of structural reforms in Oman are expected to generate fiscal surpluses and higher growth according to an IMF report. Oman’s economic recovery is gaining traction. Due to strong vaccination efforts and the economy therewith finding normality, overall GDP is projected at 4.3 percent in 2022, supported by increased hydrocarbon production and continued recovery of non-hydrocarbon economic activity. So far, direct spillovers from the Ukraine war on the economy have been limited. High oil prices and fiscal consolidation have improved fiscal and external balances considerably. The overall government balance improved mainly due to higher hydrocarbon revenue, expenditure restraint, and the introduction of VAT. Fiscal and external surpluses are expected in 2022. 

There is a continuous press forward with a broad array of structural reforms under Oman Vision 2040, with the goal to achieve the strong, job-rich and sustainable private sector-led growth needed to offer opportunities to job seekers and ensure higher living standards for future generations. Key priorities include enhancing labor market flexibility, boosting female employment, improving the business environment, advancing SOE reforms, leveraging digitalization, and continuing the implementation of green initiatives. However, uncertainties may cloud the outlook, with downside risks, mostly from global sources that dominate the short run. The outlook may be bolstered by higher-than-expected hydrocarbon windfalls, accelerating implementation of structural reforms under Vision 2040, and the realization of investment projects from partners. The downside may be risks stemming particularly from uncertainty about the war in Ukraine and its impact on the global economy and oil prices, a renewed flare-up of Covid-19 infections, tighter-than-expected global financial conditions, increased inflationary pressures from higher global food and energy prices, more persistent disruption in global supply chains, pressures to spend the hydrocarbon windfalls, and climate-related events.