Oman 2013 Nominal Economic Growth Slowest Since 2009

Oman’s economic growth plunged to 2.8 per cent in nominal terms in 2013, its slowest pace of expansion since 2009, as output in the key oil sector shrank, data showed on Sunday.

The Gulf Arab sultanate’s economy had grown 11.5 per cent at current prices in 2012. That figure was revised upwards from a previously estimated 10.8 per cent after the National Centre for Statistics & Information revisited its 2011 data.

Oman does not regularly release inflation-adjusted GDP data.

In April, the International Monetary Fund estimated in its World Economic Outlook that the non-OPEC crude exporter’s economy expanded 5.1 per cent in 2013 when adjusted for inflation, slightly outperforming a 5.0 per cent rise in 2012.

Analysts polled by Reuters in January expected real GDP growth of 4.5 per cent in 2013 and 4.0 per cent in 2014.

If confirmed by readings of GDP at constant prices, the slowdown would underline the government’s main challenge of creating enough jobs for the country’s growing population of nationals, currently 2.2 million.

Under the leadership of Sultan Qaboos bin Said, Oman has been transformed since 1970 from an impoverished backwater to a modern economy.

Oman ramped up state spending by more than 27 per cent between 2013 and 2011, when it faced protests demanding jobs and an end to corruption following social and political unrest across the Middle East. It also created tens of thousands of new government jobs.

As a result, the country, which lacks the vast oil wealth of neighbouring Saudi Arabia and the United Arab Emirates, may see its public finances slip into a deficit of 3.0 per cent of GDP as soon as next year, deepening to as much as 11.4 per cent of GDP in 2019, the IMF forecast last month.

Oman’s central bank chief told Reuters last month that the economy should grow four to five per cent this year, underpinned by stable oil prices and the billions of dollars spent on major projects in the past two years.

Last year’s slowdown in nominal growth was mainly due to a 1.4 percent fall in the oil sector, which accounts for nearly 46 per cent of Oman’s $80 billion economy and had seen a 10.7 per cent jump in nominal terms in the previous year.

Oil production rose 2.3 per cent to 343.8 million barrels in 2013, slower than a 4.1 per cent rise a year before, while the average price at which Oman sold its crude dropped to $105.5 per barrel from $109.6 in 2012.

Services, the second largest contributor to GDP, with a 37 per cent share, also saw growth slow to 10.0 percent from 15.1 per cent in 2012, the data showed.

Growth in industrial output, which accounts for nearly 18 per cent of the economy, halved to 2.8 per cent last year from 5.5 per cent in 2012.