Oman's Q1 nominal GDP slips 12% as crude continues to bite

Date

8/29/2016 1:26:14 AM

(MENAFN- Muscat Daily) Muscat-

Oman's nominal GDP - gross domestic product at market prices - fell sharply in the first quarter of 2016 on lower oil prices.

Nominal GDP dropped 12.2 per cent to RO5.64bn in the first three months of 2016 compared with RO6.42bn in the same period of the previous year, statistics released by the National Centre for Statistics and Information (NCSI) on Thursday showed.

The price of Oman crude touched its lowest level in over a decade in January.

Oil GDP plummeted 34 per cent to RO1.55bn in the first quarter of 2016 from RO2.35bn a year earlier. The average price at which Oman sold its crude in the first quarter plunged 44 per cent to US$34.76 per barrel from US$62 per barrels in the same period of last year, while the country's daily average oil output increased 3.5 per cent to 998,500 barrels in the January–March period.

Following weak oil revenues, Oman's non-oil GDP decreased 2.4 per cent in the first quarter this year to RO4.3bn. The decline in non-oil GDP was caused by decrease in the value of industrial and services sector activities.

Overall industrial output, at market prices, fell 4.7 per cent during the first quarter, mainly due to weakness in manufacturing activity, which fell 21.5 per cent in value. The construction sector, however, grew 17 per cent in the first quarter and was valued at RO521mn.

Services sector activity decreased 2.3 per cent, mainly on a 21 per cent fall in wholesale and retail trade, which was valued at RO443.5mn in the first quarter.

Following the persisting trend of lower oil prices the International Monetary Fund recently lowered its forecast for Oman's economic growth. The Fund said it expects sultanate's real GDP to grow by 1.8 per cent in 2016 against its earlier estimate of 2.8 per cent growth.

Furthermore, Oman's budget deficit widened to RO3.5bn in the January-June period this year against a shortfall of RO1.91bn in the first half of 2015, as government revenues were hurt by the slump in oil prices, additional NCSI statistics showed. The sultanate's 2016 state budget has factored in a deficit of RO3.3bn for 2016, against the actual shortfall of RO4.5bn last year.

Government's total revenues in the first half of 2016 dropped 32 per cent to RO3.11bn. Net oil revenues fell 48 per cent to RO1.49bn from RO2.85bn a year earlier, while gas revenues declined 14 per cent to RO607mn. Total public expenditure decreased 3.2 per cent to RO5.61bn from RO5.8bn.

In a report last week, ratings agency Moody's said the credit profiles of GCC countries will remain under stress despite prospects of somewhat higher oil prices in the near-term than expected earlier this year. Moody's, however, said regional economies, particularly Oman, Kuwait and Qatar, will face some near-term relief from higher oil prices, with narrower fiscal and currency account deficits than previously expected.

Moody's forecasts Oman's fiscal deficit to be 15.1 per cent of GDP this year.

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