Muscat – Oman’s economy is expected to grow by 5.5 per cent in 2023 as compared to estimated 5.0 per cent growth in 2022, mainly due to increase in oil and gas production, according to the estimates released by the Ministry of Finance.

As per the forecasts prepared by a joint team to monitor economic developments and outlook in Oman, the real GDP is projected to grow by 5.0 per cent by the end of 2022, driven by an increase in hydrocarbon activities, the ministry said in its 2023 state budget document.

For 2022, the sultanate’s hydrocarbon GDP is expected to grow by 9.5 per cent and non-hydrocarbon GDP is forecasted to grow by 2.6 per cent.

‘During 2023, the joint team expects the national economy to grow by 5.5 per cent as a result of an increase in oil and gas production. The hydrocarbon GDP is projected to grow by 10.1 per cent and non-hydrocarbon GDP is expected to grow by 2.9 per cent,’ the Ministry of Finance said.

In foreword in the 2023 budget document, H E Sultan bin Salim al Habsi, Minister of Finance, said, “The world is facing significant economic and geopolitical challenges which adversely affect energy prices and supply chains, leading to high inflation rates and growing global debt risks. Oman is not immune from such challenges which may affect our economy.”

Oman’s real GDP grew by 4.5 per cent in the first nine months of 2022, reaching RO26.3bn compared with RO25.1bn in the same period of 2021, according to latest data from the National Centre for Statistics and Information (NCSI).

‘This increase in GDP at constant prices is mainly due to an increase in oil activities by 12 per cent and non-oil activities by 1.6 per cent when compared to the first nine months of 2021,’ the ministry noted.

The value added of oil activities increased to RO9.4bn during the first nine moths of 2022 from RO8.4bn registered in the same period of 2021. The value added of non-oil activities amounted to RO17.7bn during January–September period of 2022 compared with RO17.4bn achieved during the same period in 2021, the NCSI data showed.

The International Monetary Fund (IMF) recently said that Oman’s economic recovery is gaining traction as higher oil prices, fiscal consolidation measures and progress on structural reforms are supporting a post-pandemic recovery.

The IMF expect Oman’s real GDP growth at 4.4 per cent for 2023.

Elevated oil prices and increased oil and gas production boosted Oman’s economic recovery in 2022. The sultanate sold its crude oil at an average price of US$94 per barrels during 2022 against an assumed price of US$50 per barrel in last year’s budget.

Oman’s 2023 budget is based on an average oil price estimate of US$55 per barrel and average oil production of 1.175mn barrels per day.

The Ministry of Finance said that the oil price was assumed at US$55 per barrel in 2023 budget as a precaution against oil prices volatility.

‘This price was assumed after taking into consideration several factors including the uncertainty facing global oil markets, global inflation, projected recession, and real-estate sector crisis in China. Such factors may adversely affect the global economy and so the oil prices and production,’ the ministry added.