Oman’s economy looks positive

Oman’s economy looks brighter, with the main boost coming from higher oil prices and ramp-up in gas output, which will boost government and private sector incomes and lift confidence. The country continues to push ahead with the process of economic diversification (Tanfeedh) but the economy remains highly reliant on oil revenue, which makes up 70 per cent of the budget.
As a result, the fiscal position remains a key vulnerability – the government missed budget deficit estimates for the second consecutive year in 2017, but higher oil prices facilitate a more expansionary stance in 2018, even as Oman’s VAT launch is delayed until 2019. Overall, Oman’s GDP is forecast at 3.6 per cent this year, up from just 0.2 per cent in 2017.
“Oman’s economy looks positive in the short term but more efforts are needed in order to build a sustainable economy. There are real opportunities in the non-oil sector, especially in the tourism sector. But the continuing absence of a clear succession plan is worrying,” said Maya Senussi, ICAEW Economic Adviser and Senior Economist for Oman at Oxford Economics.
Household spending power is expected to remain constrained, particularly for low-income earners. Petrol price increases after subsidy removal, and impending excise taxes will pose a drag on purchasing power in 2018 as inflation rises.