The World Bank has predicted the Sultanate’s GDP to grow by 2 percent next year in 2021, while it is expected to contract by nearly four percent this year due to the impact of Covid-19 pandemic and drop in oil prices.
World Bank’s Economic Global Economic Prospects report for June 2020 said, “The Covid-19 pandemic and efforts to contain it have sharply weakened short-term activity in the Middle East and North Africa, while increased investor risk aversion has heightened volatility in financial conditions. The steep fall in global oil and export demand has curtailed exports for oil producers, with
adverse repercussions for non-oil sectors. These challenges are compounded by several longstanding
structural impediments to growth.”
Activity among oil-exporting economies has decelerated across the board as the sharp fall in global oil demand has contributed to a steep drop in oil prices and as pandemic-related disruptions erupted. Among oil importers, activity is decelerating also as tourism prospects fade due to pandemic-related disruptions and restrictions, and as exports have sharply fallen amid sharply weakened external demand.
Economic activity in the Middle East and North Africa is forecast to contract by 4.2% because of the
pandemic and oil market developments. This forecast is notably below the forecast of +2.4% growth published in the January edition. Moreover, the outlook is surrounded by high uncertainty. Oil exporters have been adversely impacted by the plunge in oil prices and COVID-19 outbreaks, while oil importers are experiencing spillovers from the weakness in advanced economies and major emerging markets, pandemic mitigation measure-related disruptions, and an expected drop-off in tourism.