Oman’s economic growth is set to rebound in 2024, supported by higher hydrocarbon production and stronger non-hydrocarbon growth, after softening this year due to oil production cuts, the International Monetary Fund has said.
It is projected to slow down this year to 1.3 per cent, the IMF added.
However, non-hydrocarbon growth accelerated from 1.2 per cent in 2022 to 2.7 per cent in the January-June period of this year. It was supported by Oman’s recovering agricultural and construction activities and robust services sector.
“The economic outlook remains favourable … fiscal and current account balances are projected to remain in surplus over the medium term albeit trending down along with oil prices,” said Cesar Serra, who led the staff visit to Muscat.
However, the outlook is subject to high uncertainty, due to “oil price volatility, global economic and financial developments, and potential indirect spillovers from the ongoing conflict in Gaza”, Mr Serra added.
Brent, the global benchmark for two thirds of the world's oil, soared to a notch under $140 a barrel in March last year, the highest in 14 years, after Russia’s military offensive in Ukraine.
However, sluggish economic growth in China and the strong possibility of a recession in several economies weighed on the market and dragged prices lower.
Brent topped $95 a barrel in September as voluntary supply cuts by Opec+ members Saudi Arabia and Russia tightened the crude market.
But rising exports from sanctioned countries as well as concerns about the global economy have dragged crude prices lower in recent weeks.
Brent was trading 4.1 per cent down at $77.81 a barrel at 8.56pm UAE time on Thursday. While the West Texas Intermediate, the gauge that tracks US crude, was down 4.4 per cent at $73.26 a barrel.
As a result of reduced oil activities, Oman’s economy contracted by 9.5 per cent in the second quarter of 2023, Oman news agency reported in September, citing preliminary data issued by the National Centre for Statistics and Information.
The total gross domestic product 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.
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 last year to add momentum to its economic recovery from the pandemic-driven slowdown and support the development of the country’s financial sector.
The IMF said Oman’s banking sector is resilient and accelerating financial sector development is key to expanding access to finance and supporting diversification efforts.
“Profitability has recovered to pre-pandemic levels, capital and liquidity ratios are well above regulatory requirements, and asset quality remains strong,” Mr Serra said.
The structural reform agenda under Oman’s Vision 2040 is also progressing, with many reforms under the implementation stage. It will further foster Oman's inclusive growth, enhance job creation and bolster resilience, the IMF said.
“The ongoing implementation of the new social protection law will strengthen the resilience of vulnerable groups and reinforce the sustainability of the unified pension fund.
“Enhancing non-hydrocarbon revenues – including through the planned tax administration reform and personal income tax on high-income earners – and further rationalising current expenditures, particularly from phasing out untargeted energy subsidies, remain a priority,” Mr Serra said.
Killing of Qassem Suleimani
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
More on Quran memorisation:
Zayed Sustainability Prize
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
if you go
The flights
The closest international airport to the TMB trail is Geneva (just over an hour’s drive from the French ski town of Chamonix where most people start and end the walk). Direct flights from the UAE to Geneva are available with Etihad and Emirates from about Dh2,790 including taxes.
The trek
The Tour du Mont Blanc takes about 10 to 14 days to complete if walked in its entirety, but by using the services of a tour operator such as Raw Travel, a shorter “highlights” version allows you to complete the best of the route in a week, from Dh6,750 per person. The trails are blocked by snow from about late October to early May. Most people walk in July and August, but be warned that trails are often uncomfortably busy at this time and it can be very hot. The prime months are June and September.
What can you do?
Document everything immediately; including dates, times, locations and witnesses
Seek professional advice from a legal expert
You can report an incident to HR or an immediate supervisor
You can use the Ministry of Human Resources and Emiratisation’s dedicated hotline
In criminal cases, you can contact the police for additional support
