Fitch Ratings has upgraded Oman’s economic outlook to positive, affirming an IDR of BB+ due to fiscal improvements, while it downgraded Egypt’s growth forecast to 3.7% for 2024/2025, impacted by Suez Canal disruptions. Oman is expected to see GDP growth of 1.8% in 2024, while Egypt anticipates a slight recovery in the subsequent years, indicating mixed economic conditions in the region.
Fitch Ratings has upgraded Oman’s long-term foreign currency issuer default ratings from stable to positive, while affirming the IDR at BB+. This decision is attributed to Oman’s fiscal measures to address future economic challenges, alongside indications of increased GDP per capita and recent budget reforms that have contributed to reducing government debt relative to GDP. Despite a positive outlook, Fitch noted that Oman’s IDR is lower than those of its regional peers, such as Saudi Arabia (rated A+) and the UAE (rated AA-). High reliance on oil revenues and vulnerability to fluctuations in hydrocarbon prices, as well as Oman’s net external debtor status, continue to exert pressure on its ratings, according to Fitch.
Fitch anticipates that Oman’s overall GDP will experience growth of 1.8% in 2024, bolstered by a thriving non-oil sector forecasted to grow by 3.7%. The agency predicts that domestic consumption, foreign investment, and tourism will keep non-oil growth above 3% in the following years. Oman’s budget surplus is expected to decrease to 0.7% of GDP by 2025, potentially turning into a small deficit of 0.2% by 2026, based on projected crude oil prices.
In contrast, Fitch has downgraded Egypt’s economic growth forecast to 3.7% for the fiscal year 2024/2025, a decline from an earlier projection of 4.2%. This change is primarily influenced by setbacks related to Suez Canal operations. Although growth is expected to rebound to 5.1% by 2025/2026—stimulated by improved navigation in the Red Sea and an enhanced services sector due to reduced geopolitical tensions—the recovery is slower than anticipated. The Egyptian Minister of Foreign Affairs reported significant revenue losses from the Suez Canal amounting to $8 billion, highlighting ongoing economic challenges. The International Monetary Fund recently projected Egypt’s growth at 2.7% for the current fiscal year, which is expected to accelerate to 4.1% the following year. Nonetheless, an optimistic outlook for 2025 is anticipated, attributed to improved investor confidence and a more favorable currency liquidity situation for financial institutions.
Fitch Ratings, a prominent credit rating agency, evaluates the creditworthiness of countries based on their ability to meet financial obligations. The recent adjustments to Oman’s and Egypt’s economic outlooks illustrate the agency’s assessment of regional economic conditions, trade dynamics, fiscal policies, and vulnerabilities associated with dependence on oil. Oman is experiencing a positive shift in its economic indicators, while Egypt faces challenges that have necessitated a revision of its growth prospects. The analysis reflects broader macroeconomic trends within the Middle East and North Africa, influenced by oil markets and geopolitical developments.
In summary, Fitch Ratings’ revision of Oman’s outlook to positive underscores improvements in fiscal health and economic resilience, despite ongoing risks tied to oil dependency. Conversely, the downgrade of Egypt’s growth outlook suggests that significant challenges remain, particularly due to disruptions impacting the Suez Canal, although there are signs of potential recovery in the coming years. Both countries exemplify the varied economic landscapes and forecasts within the MENA region.
Original Source: www.arabnews.com
