In addition, an upswing in oil prices also contributed towards providing more funding for Oman to invest into key economic development plans, which are expected to play an important role in the country’s future.
“In the setting of moderating global growth, tightening financial conditions and decelerating world trade volume, it is notable that Omani economy gained further impetus with a broad-based upturn reflecting a surge in oil prices and expansion in non-oil economic activities,” said an official from the CBO. “The nominal GDP recorded a growth of 12 per cent in 2018, much higher as compared to 7.3 per cent in 2017."
“Furthermore, the non-petroleum sector is gradually evolving as the key force for ensuring sustainable growth in the Sultanate. The dedicated programmes under the diversification plan of Tanfeedh, along with other initiatives to improve the business environment and participation of the private sector are yielding positive results and fostering growth in non-hydrocarbon sector," he added.
The official went on to say: “The government has also undertaken some important policy measures in 2018, namely the establishment of a commercial arbitration centre, the adoption of a new commercial companies’ law, and a further streamlining of licensing processes though Invest Easy in order to improve business climate and promote foreign investment and private sector-led growth in the Sultanate.”
According to the CBO’s annual report for 2018, Oman’s GDP in 2014 was OMR31.174 billion, which then fell to OMR26.5 billion in 2015, or a drop of 15 per cent, as the decline in global oil prices bit into the country’s spending capabilities and economic growth plans. After dipping a further 4.3 per cent to OMR25.354 billion in 2016, it then rose sharply to OMR27.216 billion (a growth of 7.3 per cent) before jumping once again to OMR30.488 billion in 2018, reflecting a growth of 12 per cent.
However, while hydrocarbons do remain an important source of revenue for the nation, the share of petroleum activities in the country’s GDP decreased from 46.4 per cent in 2014 to 35.5 per cent in 2018. In the meantime, non-petroleum activities accounted for 68.4 per cent of the GDP in 2018, up from 59.9 per cent in 2014. Despite this, the revenue from hydrocarbons continues to provide the lion’s share of government revenues: in 2018, 78.2 per cent of revenues came from that sector.
“Non-oil exports, witnessing robust growth in the last few years, are likely to keep the momentum going,” said the CBO official. “In view of the above, the non-petroleum activities offers promising prospects in 2019. Considering the prospects of petroleum and non-petroleum activities, the macroeconomic outlook for 2019 appears reasonable but fraught with challenges. The outlook, however, looks to be robust over the medium-term with accelerated traction in non-oil economic activities.”
Commenting on this, Dr Anchan CK, a trade advisor in the country, felt that hydrocarbons still had a very important role to play in Oman’s economic development, given that some non-oil industries included the manufacture of by-products from the oil-and-gas industry.
“Oman is naturally well situated for petrochemicals development,” he said. “In recent times the increased emphasis on in-country-value has also benefitted this downstream industrial segment, as the Sultanate tries to heighten value added from its diverse natural resources. Tied to this is the drive to boost the ICV programme, under which companies bidding for contracts must allocate a certain percentage of their inputs to domestically produced goods and services. ICV has been particularly strong in the oil and gas sector, which is a major market for many equipment and machinery manufacturers.”
In addition, Ramanuj Venkatesh, a financial analyst, said Oman benefited from a peaceful outlook at important geostrategic location, which appealed to foreign investors.
He said: “Oman needs to compete with the likes of the United Arab Emirates and Saudi Arabia to become a regional player, but the country’s peaceful policy and non-controversial stance means it is able to attract many investors. It’s important geographic location means many investors will come here in the future, because from Oman, you can easily ship goods to many areas in the region. A stronger GDP bodes very well for the people, because more GDP means there is more money to invest into development programmes.
“Given that Oman is currently pursuing a non-oil future, this extra money can be invested into areas such as tourism, food security and mining,” said Venkatesh. “It also means that more jobs will be created, and there will be more disposable income, leading to further spending.
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