MUSCAT: Global rating agency Standard & Poor’s projected Oman’s real gross domestic product (GDP) growth at 3.2 percent in 2015.
This is against the agency’s GDP growth projection of 2.5 per cent in both years for Saudi Arabia, 4 per cent and 4.5 per cent for Qatar, 1 per cent and 2.3 per cent for Kuwait and 1 per cent and 2 per cent in 2015 and 2016 for Abu Dhabi, respectively.
The Sultanate’s nominal GDP is projected at $75 billion and $82 billion in 2015 and 2016, respectively, while real per capita GDP is estimated at $18,231 and $19,124 for these two years, respectively.
“We view the significant oil and gas reserves of the Gulf countries as a key rating strength. However, as a result of low oil prices we expect the GCC hydrocarbon exporters (Abu Dhabi, Bahrain, Kuwait, Oman, Qatar, and Saudi Arabia) to experience weaker economic income, external profiles, and government revenues from 2015 to 2018,” said Standard & Poor’s in its recent report on Middle East and North Africa (Mena) region.
“In our view, the sharp drop in oil prices since mid-2014 is likely to lead to weakening economic, external and fiscal profiles for the region, particularly for the Gulf Cooperation Council (GCC),” it added.
The agency lowered the rating on Bahrain and Oman following the decline in oil prices by more than 50 per cent since June 2014 and based on medium-term oil price assumptions.
“Bahrain and Saudi Arabia are on a negative outlook, while the rest of the region’s sovereigns are on a stable outlook,” said the rating agency in its report.
Most GCC economies depend on hydrocarbon revenues and are, therefore, vulnerable to a sharp and sustained decline in oil prices, absent substantial offsetting financial buffers.
The report said that the Brent oil price has declined from above $100 a barrel in July 2014 to below $60 in February 2015.
“In our view, the decline reflects a combination of relatively unconstrained supply and weaker demand. In Mena, as in the global economy, the lower the oil price, the more purchasing power shifts away from those sovereigns with a substantial hydrocarbon endowment to those without (the net importers,” stated the report.
“We expect a modest improvement in the annual average oil price in 2016 to $65 from $55 in 2015 as oil companies curb production of high cost wells and push out new capital spending,” noted the report.
