Strong recovery: Real GDP at market prices is projected to grow 7.9pc in 2022 – the fastest among 16 countries surveyed in the Middle East and North Africa region
The Sultanate’s real GDP at market prices is forecast to grow 7.9 per cent in 2022 – the fastest for any country in the Middle East and North Africa (MENA), the World Bank noted in its latest edition of ‘Global Economic Prospects - January 2021’ published recently.
The projection represents a leap forward from real GDP growth forecast at 0.5 per cent for 2021, and will be seen as a vindication of the Omani government’s efforts to stabilise its currently precarious fiscal situation through spending cuts, rollback of subsidies, and other far-reaching reforms.
Djibouti ranks second in the MENA region with a forecast of 7.2 per cent in 2022, followed by Egypt at 5.8 per cent and Morocco at 3.7 per cent. As many as 16 Arab and other countries are covered in the World Bank’s latest outlook for the MENA region.
Commenting on the economic outlook for the region, the report said: “Output in the Middle East and North Africa (MENA) is estimated to have contracted by 5.0 per cent in 2020. Significant disruptions related to COVID-19 have been compounded by the sharp fall in oil prices and oil demand. This contraction adds to already-slowing growth in the region and compounds pre-pandemic per capita income losses.”
Growth is expected to improve to a modest 2.1 per cent in 2021, the Report noted, citing a number of actors, including anticipated successes in bringing the pandemic under control, easing of lockdown restrictions, rising global oil demand and continuing policy support.
“However, the pandemic is expected to leave lasting economic scars on the region and dampen potential growth,” it warned.
“A resurgence of COVID-19, further disruptions related to geopolitical tensions and political instability, renewed downward pressure on oil prices, and additional balance of payments stress are key downside risks to the outlook,” the international financial institution stated.
The World Bank’s growth forecasts for Oman are remarkable considering that the Sultanate’s economy is projected to contract an unprecedented 9.4 per cent in 2020.
This compares with a contraction of 0.8 per cent in 2019, versus growth of 0.9 per cent in 2018. Indeed, all 16 countries surveyed in the report are on track to post negative growth in 2020, Egypt being the sole exception with growth forecast at 3.6 per cent for the year.
According to experts, the World Bank’s forecasts for Oman have brightened since it published its Global Economic Prospects in June 2020. That report projected Oman’s GDP to shrink by four per cent in 2020, but is set to perk up by 2.2 per cent in 2021.
A cornerstone of Oman’s efforts to turn around the economy is the Medium Term Fiscal Balance Plan, a landmark blueprint adopted by the government to strike a balance between revenue and expenditures over the 2020 – 2024 timeframe.
The plan outlines measures to bring the deficit under control, avert a further deterioration of the country’s credit rating, and boost fiscal sustainability. The ultimate goal is to reduce the budget deficit to less than 1.7 per cent of GDP in 2024, while managing the country’s public debt, which is projected to reach RO 21.7 billion by the end of 2021.
CONRAD PRABHU
@conradprabhu
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