Fitch Revises Oman’s Outlook to Positive While Downgrading Egypt’s Economic Projections
Fitch Ratings has revised Oman’s outlook to positive, maintaining a BB+ rating due to improved GDP and fiscal measures, while projecting sluggish growth for Egypt, downgrading its forecast to 3.7% amid Suez Canal disruptions.
Fitch Ratings has upgraded Oman’s long-term foreign currency issuer default ratings from stable to positive, while maintaining an IDR rating of BB+. This change reflects Oman’s effective fiscal strategies that could mitigate potential economic shocks. The agency highlighted a rise in GDP per capita, successful budget reforms, and a decline in government debt relative to GDP as contributing factors to this optimistic outlook.
Despite the improved ranking, Oman’s IDR is still lower than that of regional peers such as Saudi Arabia, rated A+, and the UAE, rated AA-. Fitch cautioned that Oman’s sustained reliance on oil revenues poses risks, owing to fluctuations in hydrocarbon prices and the country’s exposure as a net external debtor. Overall, Fitch projects a GDP growth of 1.8% for Oman in 2024, supported mainly by advancements in the non-oil sector, with an expectation of continued robust performance in domestic consumption and tourism into 2025 and 2026.
In another assessment, Fitch Ratings has downgraded Egypt’s economic growth outlook for the fiscal year 2024/2025 from 4.2% to 3.7%, citing disruptions experienced in the Suez Canal as a significant factor. Nevertheless, the forecast for subsequent years suggests an economic acceleration to 5.1% for 2025/26, bolstered by improved navigation conditions and a revitalized service sector amidst easing geopolitical challenges. Egypt’s Minister of Foreign Affairs reported that the country suffered $8 billion in losses due to reduced Suez Canal revenues, underlining the ongoing economic struggles in the nation. While the pace of recovery remains sluggish according to the International Monetary Fund, promising improvements for financial institutions in Egypt are projected for the following year due to enhanced investor confidence and favorable currency liquidity.
Fitch Ratings serves as a global leader in credit ratings, providing insights into the financial stability and risk associated with sovereign nations. Its evaluations are pivotal for investors, policymakers, and market analysts. In the Middle East, the economic conditions fluctuate based on several factors, notably oil revenue dependency, geopolitical stability, and global trade dynamics. This report highlights Oman and Egypt’s distinct economic trajectories in response to regional and international pressures, illustrating the nuances within their financial systems and growth forecasts.
In summary, Oman’s credit outlook has improved due to strong fiscal management and a developing non-oil economy, despite risks from reliance on oil revenues. Conversely, Egypt faces downgraded growth expectations resulting from logistical challenges that impede its economic recovery, although future projections suggest a positive turnaround. These assessments by Fitch Ratings underscore the differing economic landscapes within the Gulf and North Africa regions.
Original Source: www.arabnews.com
