(MENAFN - Muscat Daily) Muscat -
Oman's economic outlook is looking to be robust over the medium-term, supported by accelerated non-oil activities and increased natural gas production, according to the Central Bank of Oman (CBO).
The sultanate's nominal GDP grew 12 per cent in 2018, much higher as compared to 7.3 per cent in the previous year.
'The non-petroleum sector is gradually evolving as the key force for ensuring sustainable growth in the sultanate. The dedicated programmes under diversification plan Tanfeedh along with other initiatives to improve business environment and participation of the private sector are yielding positive results and fostering growth in non-hydrocarbon sector,' the CBO said.
The central bank said that the non-oil economic activities are gaining continuous traction in the sultanate. 'The promulgation of several laws, viz. foreign capital investment, privatisation, public private partnership, bankruptcy, establishing the Public Authority for Privatization and Partnership during 2019 would further enhance the business and investment environment, giving a much-needed impetus to the diversification and private-sector-led growth in the sultanate. Non-oil exports, witnessing robust growth in the last few years, are likely to keep the momentum going.'
With Khazzan gas project's phase 1 fully operational, natural gas under the petroleum sector is emerging as a significant contributor to the Omani economy, the central bank said.
During the remainder of 2019 and beyond, the extension of a production cut by OPEC+ and resolution of international trade frictions would be pivotal to shape up the trajectory of oil prices, the CBO said. It added, 'The current assessment is that oil prices would be range bound. The petroleum activities in nominal terms are likely to be moderate during 2019.'
Considering the prospects of petroleum and non-petroleum activities, the CBO said 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.'
The CBO said that the health of Oman's banking sector remained resilient and strong, despite early signs of some vulnerability on the back of slowing real sector. It noted the banks remained adequately capitalised as their capital adequacy ratio stood at 17.9 per cent as on end-December 2018, significantly higher than mandated by CBO at 12.875 per cent.
'The quality of loans did not deteriorate much as the gross non-performing loans (NPLs) of conventional banks stood at 2.7 per cent in December 2018 (net NPLs stood at 0.9 per cent), despite some uptick in the delinquency rate,' the CBO added.