News, Monday, Nov 28, 2022 | Jamadi Al Awwal 4, 1444
Economic performance of Bahrain, Oman expected to improve as oil prices surge: S&P
RIYADH: With oil revenue projected to rise amid strengthening crude prices, S&P
Global Ratings expects Bahrain and Oman to improve their economic performance as
the Gulf nations continue with their fiscal reforms.
The global rating agency revised Bahrain’s outlook to positive from
stable on expectations that solid growth in non-oil earnings and budget
consolidation measures will help ease pressure on the country’s fiscal
S&P said it expects Bahrain's government to continue pursuing reforms to reduce
fiscal deficits that will place debt to the gross domestic product on a more
“We also assume the country's external vulnerabilities will decline amid current
account surpluses over 2022-2024. We, therefore, revised our outlook on Bahrain
to positive from stable and affirmed our 'B+/B' ratings,” said S&P in its report
released on Nov. 25.
The rating agency kept its transfer and convertibility assessment on
Bahrain unchanged at 'BB-'.
“The positive outlook indicates that we expect the government will continue
implementing fiscal reforms to reduce the budget deficit and benefit from
additional support from other Gulf Cooperation Council sovereigns, if needed,”
As Bahrain looks at strong economic performance, with its GDP registering the
fastest growth over a decade, it is positively impacting the Kingdom’s various
sectors including real estate.
This comes as the real estate transaction volumes in Bahrain improved in the
third quarter of 2022, reaching a total of 5,482, according to American
commercial real estate consultancy CBRE.
The August month alone saw over 2,400 transactions, making it Bahrain’s second
most successful month since 2018. The country’s newer and landmark office
buildings hit their highest occupancy levels in the third quarter as occupiers
continued with the flight to quality.
Oman outlook stable
Meanwhile, Oman’s outlook remains stable as S&P expects the government's fiscal
reform program and favorable prices for key export oil will strengthen the
country’s fiscal and external metrics.
“We expect a significant improvement in the economy's external balance sheet
this year and for the government to return to a small net asset position in
2023. We, therefore, raised our long-term sovereign credit ratings on Oman to
'BB' from 'BB-',” said S&P, adding that the outlook stays stable.
The rating agency also revised its transfer and convertibility assessment to
'BB+' from 'BB' and affirmed its 'B' short-term sovereign credit rating on
Higher oil prices coupled with the government's recent reforms have helped Oman
better manage its fiscal and external positions. In addition to rebuilding
fiscal buffers on the back of windfall oil revenue, S&P said the Omani
government has continued to reduce the budget's reliance on oil receipts, in
line with its medium-term fiscal plan to 2025.
“We expect fiscal reforms to continue, including the possible introduction of
personal income tax on high earners and measures to increase value-added tax
receipts,” it noted in the report.