The World Bank has projected a 2.9 per cent growth in Oman during 2017. This real Gross Domestic Product (GDP) growth projection surpasses the budgetary estimate of 2 per cent. The bank estimated a growth of 2.5 per cent in 2016.
The bank’s Global Impact Report says that there will be steady rise in growth and has projected it at 3.4 per cent in 2018 and at a higher level of 3.6 per cent the next year.
A recent rebasing of Oman’s GDP has resulted in significant revisions to historical and forecast growth rates compared to June 2016, the report adds.
Growth in the Middle East and North Africa is forecast to recover modestly to 3.1 per cent in 2017 and to 3.3 percent in 2018 and 2019. According to World Bank estimates, oil price which averaged at $43 a barrel in 2016 is estimated to be $55 in 2017, $60 in 2018 and $63 in 2019.
Despite difficult macroeconomic conditions, there has been progress on fiscal adjustment and structural reform since mid-2016 across the region. The Sultanate, alongside Kuwait and the United Arab Emirates, had raised its fuel prices. The report points out that the Sultanate is scheduled to remove electricity subsidies for large users.
Even with oil prices on the rise, and a degree of spending consolidation during the past two years, fiscal adjustment will be needed through the medium-term in most oil-exporting economies.
While the increase in oil prices and the implementation of major reforms and privatisation will improve revenue generation, continued restraint in spending will be needed.
The Middle East and North Africa grew by an estimated 2.7 per cent in 2016, down from 3.2 per cent in 2015.1 Growth was higher in oil-importing economies than in oil exporting ones, the report notes.
The slowdown in activity in 2016 was most notable in Gulf Cooperation Council countries, where growth decelerated by nearly 2 percentage points. Oil sector weakness did spread to non-oil sectors. The recent period of low oil prices has been associated with a slowdown in investment growth across the region.
Inflation in GCC countries has been relatively stable, following the removal of fuel and utility subsidies in several countries in 2016.