Oman’s economy contracts by 9.5% to $26.24bn in second quarter

The Sultanate's economic growth is projected to slow to 1.3 per cent in 2023

Oman's economy is on a strong footing as it presses forward with economic diversification, according to the IMF. Getty Images

Oman’s economy contracted by 9.5 per cent in the second quarter of 2023 as a result of reduced oil activities.

The total GDP for the three months to the end of June at current prices declined to about 10.1 billion Omani rials ($26.24 billion) compared to 11.1 billion rials during the same period last year, Oman news agency reported on Saturday, citing preliminary data issued by the National Centre for Statistics and Information.

Oil activities during the period fell 18.3 per cent year-on-year to Dh3.6 billion rials with crude oil activities decreasing 19.5 per cent to more than 3.1 billion rials and natural gas activities by 9.2 per cent to about 476 million rials, the data shows.

Non-oil activities also slid by 3.6 per cent to 6.8 billion rials compared to 7.1 billion rials in the second quarter of last year.

Oman's economy is on a strong footing as it presses forward with its economic diversification initiatives, buttressed by favourable oil prices and fiscal reforms at a time when inflation remains contained, the International Monetary Fund said in June.

Real gross domestic product grew by 4.3 per cent in 2022, primarily driven by a strong expansion of the hydrocarbon sector, it said.

Economic growth is projected to slow to 1.3 per cent in 2023 and then rebound to 2.7 per cent in 2024, amid oil production cuts by Opec+ and moderate growth in the non-hydrocarbon sector.

The largest non-Opec producer in the Middle East, Oman expects a budget deficit of 1.3 billion rials this year, or 3 per cent of its economy, after achieving a surplus of 1.14 billion rials for 2022, the Ministry of Finance said in January.

The Gulf nation launched a three-year fiscal stability programme in October to add momentum to its economic recovery from the pandemic-driven slowdown and support the development of the country’s financial sector.

The sultanate also signed agreements with its GCC neighbours to boost its economy and create jobs, including a $3 billion railway network linking Oman with the UAE and a $320 million infrastructure development project with the Saudi Fund for Development.

In April, Fitch Ratings revised its outlook for Oman from stable to positive and affirmed its “BB” rating as the country’s finances strengthened on the back of higher oil revenue and a fall in public debt.

The positive outlook reflected the view that the government is committed to fiscal consolidation, the rating agency said at the time.