Fitch Ratings Revises Outlooks for Oman and Egypt: Economic Insights

Fitch Ratings has improved Oman’s economic outlook to positive, affirming its IDR at BB+, while downgrading Egypt’s growth forecast to 3.7%. Oman is projected to see GDP growth driven by the non-oil sector, while Egypt anticipates slower recovery influenced by Suez Canal disruptions but expects acceleration in future years following stabilization measures.

Fitch Ratings has updated its assessment of Oman, revising its long-term foreign currency issuer default ratings to positive, up from a previously stable outlook, while affirming the IDR at BB+. This positive revision is attributed to Oman’s effective fiscal measures and reduced government debt relative to GDP. Despite this upgrade, Oman’s rating remains lower when compared to its regional counterparts, such as Saudi Arabia and the UAE, whose ratings are A+ and AA-, respectively.

Fitch identified Oman’s ongoing high dependence on oil revenues and limited financial buffers as factors that still pose risks to its credit rating. Nevertheless, the agency expressed confidence in Oman’s ability to manage potential economic shocks, highlighting positive trends in public finance and projected GDP growth of 1.8% in 2024, driven primarily by the non-oil sector.

In contrast, Fitch has downgraded Egypt’s economic growth outlook to 3.7% for the fiscal year 2024-2025, a decrease from its earlier forecast of 4.2%. This adjustment is largely influenced by ongoing disruptions in the Suez Canal, which have adversely impacted the economy. However, projections for subsequent years indicate a recovery, with growth expected to reach 5.1% in 2025-2026, supported by improved conditions in the services sector and a stabilization of regional navigation routes.

Additionally, during discussions at a recent conference, Egypt’s Foreign Minister remarked on the significant financial losses incurred due to Suez Canal revenue drops, which total $8 billion. Nevertheless, there are indicators that Egypt’s economy is on a recovery path, albeit slower than anticipated. The International Monetary Fund forecasts a 2.7% growth for the current fiscal year, increasing to 4.1% the following year, while potential improvements in the banking sector are anticipated due to better investor sentiment and liquidity conditions by 2025.

The recent analyses from Fitch Ratings provide crucial insights into the economic outlooks of both Oman and Egypt. Specifically, these revisions reflect the complexities of the economic environments in the Gulf region and North Africa, characterized by dependencies on oil revenues and external trade routes. Oman’s ability to withstand economic volatility through fiscal reforms presents a contrasting scenario to Egypt’s challenges, particularly concerning disruptions in key trade infrastructures like the Suez Canal. Understanding these dynamics is essential to grasp the broader implications for credit ratings and economic stability in these nations.

In conclusion, Fitch Ratings’ positive outlook on Oman underscores the country’s fiscal resilience and anticipated economic growth, despite lingering vulnerabilities tied to oil dependency. Meanwhile, Egypt faces an adjusted growth forecast that highlights the impact of external disruptions, particularly regarding the Suez Canal. The contrasting trends in these two nations’ economic prospects reveal the varying challenges and opportunities within the broader regional economic landscape.

Original Source: www.arabnews.com