IMF sees Oman’s GDP growth rebounding to 3.8% in 2018
The International Monetary Fund (IMF) expects Oman’s real GDP growth to slow to 0.4 per cent in 2017 as a result of spending cuts and weak economic activity caused by lower oil prices. However, the Fund forecasts that Oman’s economic growth would bounce back to 3.8 per cent in 2018.
The IMF released its Regional Economic Outlook in Dubai on Tuesday. Spending cuts and an increase in oil prices are helping Gulf Arab countries lower some of the world’s highest budget deficits, the Fund said, hailing it as progress in efforts to transform economies that have relied on hydrocarbons for more than five decades.
Most of the countries in the six-member GCC have made ‘substantial’ fiscal adjustment, Jihad Azour, head of the Middle East and Central Asia department at the IMF, said in an interview in Dubai on Monday, Bloomberg reported.
The IMF expects Oman’s non-oil GDP to grow 2.5 per cent in 2017, while oil GDP to shrink by two per cent. For 2018, the Fund projects non-oil GDP growth at 3.5 per cent and oil GDP growth at 4.2 per cent.
The IMF said Oman saw its budget deficit swell to 20.6 per cent of GDP in 2016, higher than the IMF forecast. The Fund expects Oman’s budget shortfall to narrow by half to 10.1 per cent of GDP this year.
“Revenue is projected to increase but a big part of the adjustment is coming from the expenditure side,” Azour said.
The Washington-based lender expects the cumulative budget shortfall of the six GCC countries through 2021 to stand at about US$240bn, compared with a forecast of about US$350bn in its 2016 outlook, he said.
The IMF expects the oil price which Oman needs to balance its budget to drop to about US$79.2 a barrel in 2017 from US$80.1 last year. The sultanate’s breakeven oil price stood around US$100 a barrel in 2015.
After two years of deficits, the IMF expects the GCC bloc to record a current account surplus in 2017 as oil prices recover. It forecasts Oman’s current account deficit to narrow to 12.3 per cent of GDP this year from 15.5 per cent in 2016.
(With inputs from Bloomberg)