CBO: Sultanate GDP Increases By 12%

26 Aug 2019
POSTED BY Y Magazine

August 2019, Muscat: The Sultanate’s nominal GDP grew by 12%, while those from non-petroleum sectors expanded by 2.9 percent during 2018, according to the annual report of the Central Bank of Oman.

The CBO 2018 annual report was released on Wednesday, August 21 2019, and it contains the overall macroeconomic assessment and near-term outlook and analysis of the major sectors of the Omani economy during 2018. The report also contains the audited balance sheet of CBO for 2018 as well.

The money, banking and financial institutions chapter of the annual report indicate that the monetary and banking indicators expanded in line with growth in economic activities, especially from non-petroleum sectors.

The banking sector supported growth in the economy and maintained resilience, while CBO’s policies extended requisite support by ensuring adequate liquidity and undertaking measures to facilitate additional scope for credit.

The regulatory and supervisory practices pursued by CBO include risk-based supervision, implementation of Basel Accords and development of payment and settlement systems to nurture a strong and resilient banking system over the years.

At the same time, such practices in conjunction with supportive monetary policy fostered growth with low inflation and financial stability.

The nominal GDP grew by 12 percent, while those derived from non-petroleum sectors expanded by 2.9 percent during 2018. The monetary and banking indicators expanded in line with growth in economic activities, especially from non-petroleum sectors.

According to the same report, the broad money (M2) registered a growth of 8.3 percent in 2018 as compared to 4.2 percent during 2017.

The CBO’s foreign assets increased by 8.1 percent during the year, reflecting higher oil prices, whereas the ratio of CBO’s net foreign assets to broad money remained more or less constant. While the broad money recorded robust growth, the money multiplier improved to 5.7 in 2018 from 5.0 in the previous year.

Highlighting the important role of the banking sector in enhancing the Sultanate’s economy, the report also indicated that the banking and financial institutions continued to support economic activities, especially in the non-oil sector, and contributed to a surge in growth during 2018.

As for the monetary policy in Oman, it remained anchored to the USA due to the currency peg, and consequently interest rates hardened following continued normalization of monetary policy by the Federal Reserve.

The report further explains that the monetary aggregates expanded at a reasonable pace in line with non-oil economic activities. A pick-up in deposits mobilization eased liquidity pressure and banks were able to meet credit requirements without any difficulty during 2018.

It also indicated that banks in Oman continued to display resilience with adequate capital and low delinquency rates. There are 16 conventional commercial banks with a network of 449 branches, two government-owned specialized credit institutions with a network of 26 branches, and two full-fledged locally incorporated Islamic banks (the Islamic banks and conventional banks’ Islamic Windows together operated with 81 branches) at the end of 2018.

The financial markets generally functioned smoothly, albeit with varying performance across segments, and supported economic recovery. Notably, some upturn was witnessed in the volume of overnight inter-bank market, partly reflecting regulatory measures undertaken during the year.

Overall, the banking and financial sector performed satisfactorily, supporting growth in the economy while persevering financial stability.

For more details and to download the annual report, click here: https://cbo.gov.om/news/144

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