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Oman’s economic outlook remains favorable: World Bank

1 Jun 2024 By OUR CORRESPONDENT

Muscat – The World Bank has said that Oman’s economic outlook remains favorable, with real GDP growth expected to reach 1.5% in 2024, driven by increased gas production and diversification efforts.

‘These include efforts to further improve the business environment, support the role of SMEs in the economy, and accelerate investments in renewable energy and green hydrogen,’ the World Bank noted in its latest Spring 2024 Gulf Economic Update report.

Oman’s economic growth is expected to further accelerate over the medium term, supported by global demand recovery, increased investment in non-hydrocarbons, and renewable energy, the bank noted. It added that the sultanate’s inflation is forecast to converge to 2% over the medium term.

GCC growth to rebound

Economic growth in the GCC region is expected to rebound to 2.8% and 4.7% in 2024 and 2025, respectively, according to the World Bank report.

As per the World Bank’s estimates, Saudi Arabia’s GDP growth is expected to reach 2.5% this year and 5.9% in 2025. The UAE’s economic growth is projected to accelerate to 3.9% in 2024. The economies of Qatar, Kuwait, and Bahrain are expected to grow by 2.4%, 2.8%, and 3.5%, respectively.

The encouraging regional prospects and rebound are not just due to the anticipated recovery in oil output, as OPEC+ gradually relaxes production quotas during the second half of 2024, but also build on the strong momentum of the non-oil economy, which is expected to continue to expand at a robust pace over the medium term.

‘The commitment of the GCC to diversifying their economies highlights their strategic approach to fostering resilience and sustainable development during a volatile global economic period,’ the World Bank said.

It added that despite diversification efforts, hydrocarbon receipts will remain crucial in shaping the region’s fiscal and external balances in the medium term. As a result, the GCC’s fiscal surplus will continue to narrow in 2024, reaching 0.1% of GDP, while the current account surplus is expected to reach 7.5% of GDP (compared to 8.4% of GDP in 2022).

For the GCC countries to build on their current diversification momentum and realise their full potential, the World Bank report highlighted the importance of education quality in fostering long-term economic growth in GCC countries.

In her remarks, the World Bank’s GCC Country Director, Safaa el-Tayeb el-Kogali, indicated that, “Good quality education prepares young people to access better employment opportunities and higher wages, increasing the potential to spur economic growth. Over the last decade, GCC countries have significantly improved learning outcomes. Yet, there is still scope for GCC countries to further improve in learning outcomes as they lag behind international benchmarks.”

The quality of education, as noted by the World Bank, is a major factor that is holding back human capital development in the region, as well as the ability of GCC countries to compete at the global level with top-performing countries.

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