MUSCAT: The Omani economy continued to maintain a positive growth trajectory in 2023, driven by the recovery of key non-oil sectors, according to the Central Bank of Oman's (CBO) annual report. While the overall real GDP growth for the year was recorded at 1.3%, a significant decrease from the 9.6% witnessed in 2022, this was largely due to the production cuts agreed upon by the OPEC Plus group. The non-oil sectors, however, showed resilience, with non-oil GDP growing by 2.4% in real terms, compared to the 9.1% growth in the previous year.
The growth in non-oil sectors was led by agriculture and fishing, which expanded by 6.9%, reflecting Oman's strategic efforts to diversify its economy and reduce dependence on oil. The services sector also recorded healthy growth, increasing by 3.5%. However, non-oil industrial activities faced a slight contraction, declining by 0.4%, which points to some challenges in industrial growth outside the oil sector.
A key highlight of the report was the sharp decline in inflation, which fell to 0.9% in 2023, compared to 2.5% in 2022. This decrease was attributed to prudent fiscal and monetary policies, including the government’s efforts to stabilise prices through its fixed exchange rate system. The report praised these policies for helping to maintain price stability, which in turn supported the overall economic environment.
In terms of fiscal performance, Oman continued to make significant strides, achieving a financial surplus of 2.2% of GDP in 2023. This improvement was supported by favorable global oil prices and the government's enhanced fiscal discipline. Public debt was reduced significantly, with the debt-to-GDP ratio declining to 36%, compared to 40.2% in 2022. This fiscal consolidation was further reflected in the continuous improvement of Oman’s credit rating throughout the year.
The banking sector also showed promising results. The report noted that total banking assets increased by 7.8%, reaching RO 41.8 billion by the end of 2023. Credit growth was recorded at 4.3%, bringing total credit granted to RO 30.5 billion. Total deposits in the banking system grew by 12.3%, reaching RO 29.1 billion. Non-performing loans remained low at 4.5%, while the capital adequacy ratio stood at 18.9%, indicating a healthy banking sector with strong liquidity.
On the external front, Oman’s trade balance continued to support the economy. The trade surplus, along with improvements in the services and primary income accounts, helped the country achieve a current account surplus of RO 1.014 billion in 2023. The financial account, meanwhile, recorded net outflows as a result of debt repayments by both the government and corporations, reflecting ongoing efforts to strengthen fiscal sustainability. — ONA
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