Oman Economic Forecast

GDP rose 2.1% in the first six months of 2023, a growth rate exactly in line with the average of the preceding decade. Petroleum output increased 1.4%, weighed on by curbs on crude production agreed with OPEC+. Non-petroleum output rose 2.1%, boosted by stronger activity in the services sector; in contrast, manufacturing production was roughly flat year on year. Looking at data for the months since, the country pumped 4.6% less crude in July–October than in the same period a year ago, with the petroleum sector likely contracting as a result. Meanwhile, looking at the non-petroleum sector, in the same period, car registrations and government revenue rose by 3.8% and 21.6% yoy, respectively. In addition, in Q3, bank credit grew at the fastest yoy pace since Q2 2017, and electricity output rose at the speediest annual rate since Q4 2021, boding well for activity.

Inflation came in at 0.3% in October, down from September’s 1.3%. Price pressures in the Sultanate remain lower than in other Gulf countries, but next year, inflation is expected to rise to around the average of the region on stronger economic growth. Commodity price spikes pose an upside risk.