Oman’s expected to continue slowdown this year: CBO

17 Jul 2017
POSTED BY Y Magazine

The government has been proactive in undertaking various measures to address the macroeconomic challenges over the medium-term.



Oman’s economy is expected to witness a slowdown in 2017, but the country is well placed to deal with the challenges posed by the economic slowdown in the short term, the Central Bank of Oman (CBO) said in its annual report released on Sunday, according to the Times of Oman.

The government has been proactive in undertaking various measures to address the macroeconomic challenges over the medium-term.

“Although oil prices are expected to further recover somewhat, Oman oil price would remain much lower than the external breakeven level. At the same time, planned fiscal consolidation is expected to slow down the growth of the non-hydrocarbon sector,” the report noted.

Lower hydrocarbon prices continued to weigh on the overall macroeconomic scenario in Oman, notwithstanding various reform measures undertaken by the authorities to improve fiscal balance, and promote economic diversification to reduce dependence on the oil sector.

Both the current account balance and fiscal balance remained in large deficit for the second consecutive year in 2016. The output in hydrocarbon sector declined significantly, while non-hydrocarbon sector output grew marginally in 2016.

Overall nominal gross domestic product (GDP) (at market prices) contracted by 5.1 per cent, while inflation inched up to 1.1 per cent during 2016. The fiscal deficit further grew and consequently, debt to GDP ratio shot up from 12.8 per cent at the end of 2015 to 31.4 per cent at the end of 2016.

The progress on macroeconomic reforms, such as introduction of excise and value added tax (VAT), approval for legislations on labour and foreign direct investment (FDI) will be paramount for shaping the medium-term outlook of the Omani economy.

Furthermore, the continued emphasis on economic diversification under the Ninth Five Year Development Plan and Tanfeedh would pave the way for sustainable growth in the economy.

Government has already taken various measures to promote tourism and expand the manufacturing sector while the approval of the legislation on FDI would usher in increased participation of foreign investors and accelerate the pace of economic diversification in the economy.


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