Oman’s economy to grow by 5 per cent in 2015

January 5, 2015 12:25 pm

Oman’s economy is expected to grow by 5 per cent this year, against an estimated 4.4 per cent growth in gross domestic product (GDP) in 2014.

Oman’s national economy is expected to continue growth at an acceptable rate, driven by the growth of non-oil activities and effective strength of domestic demand and high oil production, the Ministry of Finance says in a statement.

The growth rate of the non-oil sector is expected at 5.5 per cent and the main areas of focus include construction, electricity and water, trading, services and manufacturing industries. In 2013, the country’s real economic growth was 4 per cent.

The country’s macro-level stability, completion of several major infrastructure projects, better growth in non-oil sectors, availability of skilled workers, financial stability and a stable local currency are favourable factors for overcoming the challenges in view of a fall in oil revenue, the ministry notes.

There will be a substantial fall in oil revenue this year, which constitutes 79 per cent of government income, it says

Oil prices plunged by more than 48 per cent last year to a five-year low at $56 per barrel. The Omani government estimates oil revenue at OMR9.16 million for 2015.

The sultanate’s inflation is also projected to decline to two per cent in 2015, mainly on account of a fall in global commodity prices. This is against 2.2 per cent and 3.1 per cent growth in inflation rate in 2014 and 2013, respectively.

Budget surplus is expected to decline to 2.9 per cent of the country’s gross domestic product (GDP) in 2014 from as high as 8.2 per cent in 2013.

As far as the financial sector is concerned, the Ministry of Finance says the total bank credit rose 10.5 per cent to OMR16.8 billion in 2014, from OMR15.2 billion in the previous year.

Likewise, total deposits moved up by 14 per cent to OMR17.3 billion by the end of 2014, from OMR15.2 billion for the same period of 2013.

Thanks to increased oil and non-oil exports, the national economy is also projected to continue to maintain its external balances, but the size of current surpluses is expected to retreat as a result of the noticeable rise in domestic demand and the falling oil prices.