Oman Economic Outlook
GDP grew 3.9% in Q4 2022, bringing growth over the whole of 2022 to 4.3%. The hydrocarbons sector expanded 12.2% in 2022, driving activity. The non-oil sector grew 1.6%, with services output growing 5.0% and industrial output contracting 4.7%. Heading into Q1 2023, the hydrocarbon sector appears to have deteriorated, with oil output in the quarter lower than in Q4. Private spending may have fared better; inflation in the quarter averaged the lowest since Q2 2021. In addition, credit growth was higher in January–February compared to Q4. In other news, the government repaid USD 2.9 billion in loans in Q1 in April. In the same month, Fitch and S&P Global upgraded the outlook on the government’s credit rating to positive, boding well for fiscal sustainability ahead.
Inflation rose slightly to 1.6% in March (February: 1.9%). Inflation should remain weak in 2023, averaging the lowest in the Gulf region. Key drivers of this decline include recent rate hikes, government subsidies and a tougher base effect. Factors to watch include commodity price swings and potential further government intervention.