Oman’s economic landscape is undergoing a significant transformation as global credit rating agency Standard & Poor (S&P) elevates the nation’s long-term credit rating from “BB” to “BB+.” This move by S&P Global underscores a notable shift in Oman’s non-oil sector, indicating the potential for substantial growth in the years to come, particularly between 2023 and 2026. This transformation is poised to play a pivotal role in bolstering the country’s financial well-being.
Furthermore, the momentum in government fiscal and economic activities is expected to persist until 2026, with the agency forecasting an average annual GDP growth rate of 2 percent during this period.
Oman’s economy has traditionally relied on the oil sector, which contributes approximately 30 percent of the country’s GDP, 60 percent of its goods exports, and 70 percent of government fiscal receipts. This oil sector dependency has influenced S&P’s assessment of Oman’s fiscal and external resilience, a factor reflected in the upgraded credit rating.
S&P anticipates a slight deceleration in economic growth, projecting a 1 percent decrease in 2023, primarily attributed to reductions in oil production. However, this decline in oil output is expected to be offset by increased condensate and gas production. In the non-hydrocarbon sector, Oman is forecasted to experience a 2 percent growth in 2023, with hydrocarbon manufacturing expected to rebound in 2024 and 2025.
Moreover, Oman’s banking sector has witnessed a substantial increase in credit balance, recording a growth rate of 5.3 percent in July 2023 compared to the same month the previous year. Data from the nation’s central bank reveals that credit extended to the private sector surged by 5.2 percent by the end of July 2023, reaching a total of 20.2 billion Omani rials ($52.41 million).
Highlighting another significant sector, Oman’s tourism industry is poised for expansion in the coming years. Its contribution to the GDP is projected to rise to 2.75 percent, up from 2.4 percent in 2023, according to Oman’s Minister of Heritage and Tourism, Salim Al-Mahrouqi. Al-Mahrouqi detailed in a statement to the Oman News Agency that the tourism industry accounted for 1.07 billion Omani rials of the comprehensive 1.9 billion Omani rials revenue generated in 2022.
S&P’s upgraded credit rating reflects the changing dynamics of Oman’s economy and underscores its efforts to diversify revenue sources beyond oil. The agency’s assessment emphasizes the potential for sustained economic growth and stability in Oman in the coming years, marking a positive turning point for the nation’s economic outlook.
