Omani economy doing fine

Numerous indications rightly suggest that the economy of Oman is doing perfectly fine. For instance, the International Monetary Fund forecasts continuation of steady growth rates. The IMF expects gross domestic product growth rate of 5.1 per cent this year, up from 5 per cent and 4.5 per cent in 2012 and 2011, respectively.

The credit largely goes to relatively strong output and prices of both oil and gas and thereby spending ability of the public sector. It is believed that the petroleum sector accounts for 76 per cent of treasury revenues, divided into 63 per cent for oil and 13 per cent for gas.

Understandably, Oman is benefiting from positive developments in its hydrocarbons sector, notably oil. Oil output reportedly stood at 920,000 barrels per day in 2012 up from 878,000 bpd in 2011. Still, the projected figure for 2013 stands at 930,000 bpd and possibly higher.

According to the IMF, combined oil and gas exports are projected to record revenues of $36.4 billion in 2013, slightly higher than that of 2012’s level. Yet, the figure compares favourably with that of $33.4 billion in 2011.

The hydrocarbon’s sector accounts for 70 per cent of total exports. In turn, this chiefly explains Oman’s ability of recording trade surplus in excess of $20 billion. This net external position is one reason behind the country’s ability of securing satisfactory sovereign ratings.

Turning to another strength area, the authorities prepared the budget for fiscal year 2013 at $33.5 billion, up from $26 billion in 2012, leaving behind $4.4 billion projected deficit. However, chances are no actual shortage would be recorded, as the budget using an average oil price of $85 per barrel.

This rate is below prevailing pricing levels in the international oil markets. Accordingly, stronger actual income could not be ruled out, enough to help covering projected budgetary shortage.

As suggested, other attractive developments in Oman relate to prudent credit rating. Happily, Oman enjoys smart ratings, namely A and A1 by Standard & Poor’s and Moody’s, respectively. And both agencies have stable outlook for the Sultanate.

In affirming the rating only in June, S&P cited reasons strong fiscal and external surpluses. For one, trade surplus amounted to around $25 billion in 2012 on the back of positive developments in the country’s hydrocarbons sector.

In addition, S&P is pleased with fiscal surpluses, accounting for 3.3 per cent of the country’s GDP in 2012; still, the surplus is expected to rise further to 4.2 per cent of GDP in 2013.

Furthermore, numerous sectors in the Omani economy should benefit from extraordinary allocations for development projects. By one account, officials are expected to award projects worth some $65 billion between 2013 and 2017. This is an astonishing amount in relation to the country’s GDP of $77 billion.

Planned projects include a $10 billion refinery and petrochemical complex in Duqm. In fact, Duqm is destined to play a key role in Oman’s economy in the years to come. The government is sparing no efforts into turning Duqm into an industrial town, and export hub and more importantly a comprehensive touristic destination.

Located some 560 km from Muscat in the central region, the Duqm area is renowned for its scenery. Already, the Sultanate is recognised as a tourist heaven within the Gulf Cooperation Council (GCC) region.

Development of places like Duqm is essential for addressing exceptional economic challenges like that of creating suitable jobs for locals. Available demographic statistics are alarming with nearly 43 per cent of Omani nationals being below 15 years of age.