Oman's economy is on a strong footing as it presses forward with its economic diversification initiatives, buttressed by favourable oil prices and fiscal reforms at a time when inflation remains contained, the International Monetary Fund has said.
Real gross domestic product grew by 4.3 per cent in 2022, primarily driven by a strong expansion of the hydrocarbon sector, the IMF said on Monday after a staff visit.
Economic growth is projected to slow to 1.3 per cent in 2023 and then rebound to 2.7 per cent in 2024, reflecting oil production cuts by Opec+ and moderate growth in the non-hydrocarbon sector “due to recovering but still-subdued construction activity, a slowdown in global economic activity and tighter financial conditions”, said Cesar Serra, who led the mission.
Oman's non-hydrocarbon growth is projected to rise to 2 per cent in 2023 and 2.5 per cent in 2024, from 1.2 per cent in 2022.
Meanwhile, headline inflation eased to 1.1 per cent annually by April, from 2.8 per cent year on year in 2022, reflecting lower food inflation and a stronger US dollar.
“Substantial oil windfalls and fiscal consolidation have boosted fiscal and external positions,” Mr Serra said.
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.
Despite the price volatility, Brent gained about 10 per cent last year, after jumping 50 per cent in 2021, while West Texas Intermediate ended up about 7 per cent higher last year, after a 55 per cent surge in 2021.
Oman's fiscal balance reached a surplus of 7.5 per cent of GDP in 2022 and is expected to remain in surplus over the medium term on the back of favourable oil revenue and fiscal measures introduced by the government, the IMF said.
Central government debt as a share of GDP declined significantly to 40 per cent in 2022, from 61.3 per cent in 2021, as authorities used the oil windfall to repay government debt.
State-owned enterprises' debt as a share of GDP also declined to 28.8 per cent last year, from 40.7 per cent in 2021, on the back of asset divestments, improved performance and debt repayments, the fund said.
Last year, the country's current account recorded its first surplus since 2014, at 5.2 per cent of GDP, and is projected to remain in surplus over the medium term, the IMF said.
The sultanate, the largest non-Opec producer in the Middle East, launched a three-year fiscal stability programme in October to add to the momentum of its economic recovery from the coronavirus-driven slowdown and support the development of the country’s financial sector.
“The banking sector remains sound. Profitability has recovered from pandemic lows. Banks display ample capital and liquidity buffers. Asset quality remains strong while credit to the private sector continues to expand,” Mr Serra said.
Overall, the near to medium-term outlook is favourable and risks to the outlook are balanced, he said.
“Going forward, the authorities’ structural agenda under Oman’s Vision 2040 will support stronger, private sector-led, job-rich non-hydrocarbon growth while entrenching fiscal and external sustainability,” Mr Serra said.
The IMF also called for greater labour market flexibility, enhanced social protection and insurance, improved tax collection efficiency, an accelerated pace of digitalisation, the development of the financial sector and investments in green energy.
From Europe to the Middle East, economic success brings wealth - and lifestyle diseases
A rise in obesity figures and the need for more public spending is a familiar trend in the developing world as western lifestyles are adopted.
One in five deaths around the world is now caused by bad diet, with obesity the fastest growing global risk. A high body mass index is also the top cause of metabolic diseases relating to death and disability in Kuwait, Qatar and Oman – and second on the list in Bahrain.
In Britain, heart disease, lung cancer and Alzheimer’s remain among the leading causes of death, and people there are spending more time suffering from health problems.
The UK is expected to spend $421.4 billion on healthcare by 2040, up from $239.3 billion in 2014.
And development assistance for health is talking about the financial aid given to governments to support social, environmental development of developing countries.
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Wimbledon order of play on Tuesday, July 11
All times UAE ( 4 GMT)
Centre Court
Adrian Mannarino v Novak Djokovic (2)
Venus Williams (10) v Jelena Ostapenko (13)
Johanna Konta (6) v Simona Halep (2)
Court 1
Garbine Muguruza (14) v
Svetlana Kuznetsova (7)
Magdalena Rybarikova v Coco Vandeweghe (24)
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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.”
