The Sultanate of Oman’s post-pandemic economic recovery is anticipated to strengthen over the medium term, buoyed by strong oil and gas prices, growth in hydrocarbon output, and comprehensive fiscal reforms, according to the World Bank’s latest Gulf Economic Update (GEU).
The report also noted that economies of the Gulf Cooperation Council (GCC) are projected to expand by 6.9 per cent in 2022 before moderating to 3.7 per cent and 2.4 per cent in 2023 and 2024.
“(Oman’s) GDP growth is forecast to reach 4.5 per cent in 2022 before moderating to an average of 3.2 per cent in 2023-24,” the World Bank report said. “The overall fiscal deficit is expected to turn into a surplus of nearly 6 per cent of GDP in 2022 — the first surplus in almost a decade — reducing gross financing needs. Similarly, the external balance is swinging back into surplus (6 per cent of GDP in 2022) — the first surplus in 7 years — on the back of higher oil receipts and recovery in non-oil exports.”
Supported by higher hydrocarbon prices, the GCC region is expected to register strong twin surpluses in 2022 and continue over the medium term, according to the report. The regional fiscal balance is projected to register a surplus of 5.3 per cent of GDP in 2022 — the first surplus since 2014 — while the external balance surplus is expected to reach 17.2 per cent of GDP.
This World Bank report, titled “Green Growth Opportunities in the GCC,” examines the development of the green growth sectors and looks at the potential opportunities this could provide for the GCC countries.
The report also discusses GCC countries’ plans to decrease the use of fossil fuels to generate electricity, their aims to increase the capacity of renewable energy to power domestic electricity needs, and their goals to enhance the role of the private sector and reduce the role of the public sector. At the same time, it looks at how the climate agenda could be used to further diversify their economies in high growth sectors, including the upstream and downstream industries for the energy transition.
“There is an excellent and timely opportunity to diversify the economy further using a green growth strategy, and playing a leading role in the global transition to low-carbon economies,” said Issam Abousleiman, World Bank Regional Director for the GCC.
“The region could use the green growth transition to focus policies on developing green technologies and associated skilled labor that would reverse trends in productivity and enable the region to grow faster.”
The GCC countries’ total GDP is projected to be close to $2 trillion in 2022. If the GCC continued business as usual, their combined GDP would grow to an expected $6 trillion by 2050. However, if the GCC countries implemented a green growth strategy that would help and accelerate their economic diversification, GDP could have the potential to grow to over $13 trillion by 2050.