MUSCAT: A recovery in oil prices and a ramp-up in gas output will boost the Sultanate’s economic growth, according to a report released by the ICAEW on the Middle East economies on Monday. The growth in gross domestic product in Oman is expected to be at 3.6 per cent this year.
Oman’s economy looks brighter, with the main boost coming from higher oil prices and a ramp-up in gas output, which will boost government and private sector incomes and lift confidence. The country continues to push ahead with the process of economic diversification (Tanfeedh) but the economy remains highly reliant on oil revenue, which makes up 70 per cent of the budget,” the report stated.
“Oman’s economy looks positive in the short term but more efforts are needed in order to build a sustainable economy. There are real opportunities in the non-oil sector, especially in the tourism sector,” Maya Senussi, ICAEW Economic Advisor and Senior Economist for Oman at Oxford Economics, said.
Household spending power is expected to remain constrained, particularly for low-income groups. Petrol price has increased after subsidy removal, and impending excise taxes will pose a drag on purchasing power in 2018 as inflation rises.
Overall, the Middle East’s GDP is expected to grow by 2.9 per cent this year, up from 1.1 per cent in 2017,” it added.
The region’s overall economic outlook looks positive this year and in 2019, thanks to the rising oil prices (forecast at $67 per barrel this year), expansionary fiscal policy, and relative improvements in overall security conditions.
Economic activity is expected to pick up for oil exporters driven by two main factors, rising oil prices and increased government spending. Overall, GCC’s GDP is expected to grow by 2.4 per cent this year, up from 0.1 per cent last year. In 2019, as OPEC phases out its output cut, GDP growth is expected to accelerate further for oil exporters.
The outlook is similarly positive for oil importers as well. Lebanon’s GDP is expected to accelerate to 2.7 per cent in 2018 from an estimated 1.8 per cent in 2017, boosted by public infrastructure investment and trade and tourism recovery. In Jordan, the kingdom’s GDP is expected to have a marginal growth of 2.5 per cent this year, up from 2.3 per cent in 2017, mainly due to improving external demand and a positive outlook from its main trading partners.
