Fitch Ratings upgraded Oman’s outlook to positive owing to strengthened fiscal measures, projecting GDP growth of 1.8% in 2024. Meanwhile, Egypt’s economic outlook was downgraded to 3.7% for FY 2024/2025, primarily due to Suez Canal disruptions, though a recovery is expected in subsequent years.
Fitch Ratings has updated its long-term foreign currency issuer default rating for Oman, improving the outlook from stable to positive while maintaining the IDR at BB+. This rating shift is attributed to Oman’s enhanced ability to counter potential fiscal shocks, increased per capita GDP, recent budget reforms, and decreasing government debt relative to its GDP. Although Oman’s rating remains lower than those of regional peers such as Saudi Arabia and the UAE, Fitch’s assessment reflects a greater resilience within Oman’s public finances and fiscal tools available for crisis response.
Fitch anticipates Oman’s GDP to grow by 1.8% in 2024, propelled by a burgeoning non-oil sector, while overall growth in 2023 is predicted to be at 1.2%. This growth is expected to be sustained by domestic consumption, robust foreign investment, and tourism, with non-oil growth projected to exceed 3% through 2026. However, Oman’s budget surplus is anticipated to diminish to 0.7% of GDP in 2025 and transition to a slight deficit of 0.2% in 2026, depending on future oil price scenarios.
In contrast, Fitch has downgraded Egypt’s economic growth forecast for the fiscal year 2024/2025 to 3.7%, down from an earlier prediction of 4.2%. This revision is primarily driven by disruptions in the Suez Canal, with expectations of a recovery in economic growth to 5.1% in 2025/26, contingent on the stabilization of navigation routes and easing geopolitical tensions impacting the performance of the services sector.
The impact of the Suez Canal’s revenue losses, estimated at $8 billion, was highlighted by Egypt’s Minister of Foreign Affairs, Badr Abdelatty, in November. Despite a slower recovery than previously forecasted, the IMF projects a growth of 2.7% in the current fiscal year, rising to 4.1% in the subsequent year. Furthermore, improvements are anticipated in Egypt’s banking sector as investor confidence and foreign currency liquidity conditions strengthen in 2025.
Fitch Ratings, a prominent credit rating agency based in the United States, regularly assesses the economic outlook of countries, providing ratings and forecasts that reflect their ability to meet financial commitments. In this context, Oman has been positively rated owing to its fiscal reforms and decreasing government debt, while Egypt faces challenges stemming from disruptions in trade and slower economic recovery. Regions such as the Gulf Cooperation Council, particularly with major players like Saudi Arabia and the UAE, are compared to highlight varying levels of economic resilience and credit risk across the region.
In summary, Fitch Ratings has moved Oman’s economic outlook from stable to positive, supported by improved fiscal measures and projected GDP growth from its non-oil sector. In contrast, Egypt has experienced a downgrade in its growth forecast due to challenges in the Suez Canal, although potential recovery is noted in the coming years. Both nations reflect distinct trajectories influenced by external and internal economic factors, impacting their financial ratings and growth projections.
Original Source: www.arabnews.com
