IMF Forecasts Moderate Economic Growth for Oman, Bahrain, and Qatar in 2024-2025

The International Monetary Fund (IMF) has concluded its Article IV consultations with the government of Oman, forecasting moderate economic growth for the country in 2024 and 2025, driven by non-oil activity, reform progress, and investment. The IMF's forecast suggests that the economies of Bahrain and Qatar will also experience similar growth trends in the near term.

Why this matters: The moderate economic growth forecast for Oman, Bahrain, and Qatar has significant implications for the region's economic diversification and job creation efforts. A stable economic outlook in these countries can also have a positive impact on global trade and investment flows.

According to the IMF, Oman's real GDP grew by 1.3% in 2023, supported mainly by the expansion in non-oil activities. Economic growth is expected to remain moderate at 0.9% in 2024 due to the extension of the OPEC agreement on oil production cuts until the first half of the year. However, growth is projected to accelerate to 4.1% in 2025 as a result of the recovery of oil activities and the expected relaxation of restrictions imposed on OPEC quotas.

Non-oil activity growth in Oman is expected to accelerate to 2.6% in 2024 and 3.2% in 2025, driven by the government's commitment to the reform plan and investment projects. The fiscal balance recorded a surplus of 6.6% of GDP in 2023, which is expected to continue in the medium term, supported by favorable oil revenues, growing non-oil revenues, and continuing financial control efforts.

The IMF report also highlights the solid state of Oman's banking sector, with high levels of bank capital, liquidity, and profitability, along with strong asset quality. The government's priorities include improving tax administration, simplifying financial expenditures, strengthening the medium-term financial framework, facilitating financing for SMEs, and accelerating digital transformation. These reforms align with the objectives of Oman Vision 2040, aiming to foster a more comprehensive, sustainable, and knowledge-driven economy.

The IMF's forecast for moderate economic growth in Oman, Bahrain, and Qatar in 2024 and 2025 comes at a time when the Middle East region is strategically positioned in the new trade order. Countries like the UAE and Saudi Arabia are well-placed to leverage their resources, geography, and strategic advantages to facilitate economic diversification and job creation through trade agreements and regional collaboration.

The level of public sector debt as a percentage of GDP in Oman decreased significantly to 36.5% in 2023, compared to 40.9% in 2022. The current account balance showed a surplus of 1.4% of GDP in 2023 and is expected to remain in surplus in the medium term. These positive indicators, along with the government's commitment to reform and the solid state of the banking sector, bode well for Oman's economic prospects in the coming years.

Key Takeaways

• IMF forecasts moderate economic growth for Oman, Bahrain, and Qatar in 2024 and 2025.
• Oman's real GDP grew 1.3% in 2023, driven by non-oil activities.
• Non-oil activity growth in Oman to accelerate to 2.6% in 2024 and 3.2% in 2025.
• Oman's fiscal balance recorded a surplus of 6.6% of GDP in 2023, expected to continue.
• Public sector debt as a percentage of GDP in Oman decreased to 36.5% in 2023.