Oman stands at a pivotal juncture in its economic history. As the global economy grapples with the challenges of inflation, oil price volatility, and a general downturn, the Sultanate has set its sights on a bold new vision for the future. Launched in 2020, Vision 2040, Oman's ambitious roadmap for economic and social development, aims to steer the nation towards a more diversified, sustainable, and resilient economy. This vision represents a critical shift in Oman's economic strategy, as the country seeks to reduce its dependence on oil and gas revenues and create new opportunities for growth and prosperity.
At the heart of Vision 2040 lies the goal of economic diversification. The government has outlined a comprehensive strategy that focuses on investing in high-potential sectors, enhancing the business environment, and developing human capital.
By creating a more favourable ecosystem for growth and innovation, Oman seeks to attract foreign investment, stimulate entrepreneurship, and create new opportunities for its citizens.
One of the key sectors targeted for growth is tourism and hospitality. With its stunning natural beauty, rich cultural heritage, and strategic location, Oman has immense potential to become a leading tourist destination. By 2040, the government aims to invest $31 billion into the tourism sector and boost the contribution of tourism to GDP from 2.6% to 6%, creating over half a million new jobs in the process.
Similarly, Oman is leveraging its strategic location to develop its logistics and transportation sector. With its deep-water ports, well-developed road network, and proximity to major trade routes, Oman is ideally positioned to become a hub for trade and commerce in the region. Manufacturing and industry are also critical areas of focus for Oman's diversification efforts. The government is promoting growth in sectors such as petrochemicals, mining, and fisheries, with the aim of creating value-added products and reducing import dependence. By investing in technology and innovation, Oman is fostering entrepreneurship and creating new economic opportunities in these sectors.
The Oman Investment Authority has also announced its plan to privatise 35 state-owned companies across various sectors by 2027. This strategic move aims to attract foreign investment, stimulate private sector growth, and enhance the efficiency and competitiveness of Oman's economy. By reducing the government's direct involvement in these companies and opening them up to private investment, the government is creating new avenues for innovation and entrepreneurship.
The tangible impact of these efforts is already evident, with the International Monetary Fund forecasting that Oman’s economy is set for a rebound in 2024. Standard Chartered's latest Global Focus report also paints a positive picture for Oman, as we forecast public debt to decline to 34% of GDP and external debt repayment is expected to amount to 5% of GDP in 2024. We also project a continued improvement in Oman’s credit rating as the Sultanate of Oman is posed to regain its investment grade rating as a result of continued reduction in its debt-to-GDP ratio, enhanced fiscal performance, and commitment to reforms. Inflation in Oman is also forecast to decelerate from 1.0% last year while the non-oil sector is set to grow to 2.5% this year.
Looking ahead, several factors are set to drive Oman's continued economic strength. The recently announced Oman-UAE tech fund, with a capital of USD 180 million, aims to support technology startups and foster innovation in both countries. This initiative is expected to create new opportunities for entrepreneurs and drive the development of new industries in Oman. The Oman Future Fund, with a capital of USD 5.2 billion, is another key initiative that will invest in strategic sectors and projects to drive economic growth and diversification. This fund will focus on sectors such as tourism, logistics, manufacturing, and technology, with the aim of creating new jobs and boosting Oman's non-oil exports.
As Oman charts its course towards a more prosperous and sustainable future, Standard Chartered remains committed to supporting the country's economic goals. With our global expertise, innovative solutions, and deep understanding of the local market, we are well-positioned to help Oman navigate the challenges and opportunities ahead. We believe that Oman's Vision 2040 represents a bold and ambitious plan for the country's future, and we are excited to be part of this journey.
Oman's positive economic outlook is a testament to the government's visionary leadership and the resilience of its people.
By staying the course on its diversification strategy, investing in key sectors, and fostering innovation and entrepreneurship, Oman is well on its way to achieving its Vision 2040 goals. As the country continues to navigate the challenges of the global economy, it is clear that Oman has the resources, the talent, and the determination to succeed. With the support of partners like Standard Chartered, Oman is poised to become a model for economic diversification and sustainable growth in the region and beyond.
Hussain al Yafai
The writer is CEO of Standard Chartered Oman
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