Plenty of evidence suggests that Oman’s economy is doing well. The notable aspects are a healthy fiscal surplus, positive external balances, solid economic growth rates, steady rise in oil output, and gains notched on numerous international indexes, to name a few.
The fiscal surplus in 2011 was equivalent to around 7 per cent of the country’s gross domestic product (GDP). Also, the sultanate posted a current account surplus in the region of 14 per cent of GDP in 2011. A good share of the credit for this healthy performance goes to steady oil prices.
In fact, the statistics could only improve if and when Oman starts capitalising the $10-billion (Dh36.72 billion) Gulf Development Fund. In 2011, the GCC as a group agreed to provide financial assistance in the form of $1 billion annually over a span of 10 years to both Bahrain and Oman as a means of addressing socio-economic issues that reflected in protests in both countries.
The IMF has estimated Oman’s real GDP adjusted for inflation at 4.4 per cent in 2011 versus 4.1 per cent in 2010. Certainly, this is a satisfying growth level considering diverse economic challenges across the globe especially in the Eurozone region.
Yet, stronger spending and other exceptional economic factors are not occurring at the expense of inflation. The inflation rate stood at around 3.6 per cent in 2011, up slightly from 3 per cent in 2010. There is no risk of a return of inflationary pressures prevalent in 2007 and the first half of 2008 or prior to the emergence of the global financial crisis.
Still, this limited rise in the inflation rate has occurred for what might be termed good reasons with authorities putting together numerous projects and initiatives worth $2.6 billion in response to public demands. The schemes assure the creation of thousands of jobs for locals in governmental entities and monthly payment of $390 for Omani nationals actively seeking employment plus enhancement of retirement entitlements.
Moreover, positive developments keep emerging from the country’s petroleum sector. The June 2012 issue of BP Statistical Review of World Energy shows Oman’s oil output standing at 891,000 barrels per day in 2011, up by 2.8 per cent from production level in 2010. This points to a sustained rise of output for several years in a row ever since 2007 when the production level stood at 715,000 barrels per day.
Not surprisingly, the sultanate is being rewarded by international indexes and credit agencies for the good work. The country moved up 10 places in the 2012 Global Innovation Index (GII) to 47 among 141 economies. This marked the best improvement amongst GCC countries as three regional countries saw their rankings plummet. The premier business school of INSEAD and WIPO (a specialised UN agency) co-publish GII.
Also, Oman advanced four places in the 2012 Global Enabling Trade Report, clinching number 25 globally among 132 nations. This marked the second best performance for GCC countries after the UAE. The World Economic Forum published the annual survey.
Clearly, these high points and more have convinced Standard & Poor’s Ratings Services last week to change the outlook for Oman’s long-term sovereign credit rating from negative to stable.
Concurrently, the sultanate’s rating remains in the A level not withstanding adverse effects of the socio-political crisis of early 2011 when many Omani nationals took to the streets demanding socio-economic and socio-political reforms. Certainly, S&P can not be faulted for reversing the outlook on Oman’s economy given all the positive noises.
