Oman economy dips 19.8% in Q1 after oil plunge

A sharp decline in the hydrocarbon industry depressed Oman's economy by around 19.8 per cent in the first quarter of 2009 despite growth in its non-oil sector, official figures showed.

The fall in oil prices also severely hit the Gulf country's budget revenues, which tumbled by more than 17 per cent in the first five months of 2009, according to figures by the Omani Ministry of National Economy.

From around RO5,094 billion (Dh48.9 trillion) in the first quarter of 2008, Oman's nominal gross domestic product (GDP) shrank to nearly RO4,087bn in the first quarter of 2009, the Ministry said in its June bulletin on Oman's socio-economic developments.

The decline was a result of a sharp contraction in the hydrocarbon sector by 43 per cent due to a plunge in crude prices, which averaged around $40 in the first quarter of this year compared with over $80 in the same period of 2008.

The report showed the oil and gas sector's contribution to the GDP tumbled from around RO2,491bn to nearly RO1,420bn in the same period.

The crude sector alone plummeted by around 46.4 per cent while the gas sector slipped by about 1.6 per cent.

The figures showed the non-oil sector grew by nearly 3.2 per cent from around RO2,669bn to RO2,753bn.

A breakdown showed there was a growth of around 11.8 per cent in construction, 7.8 per cent in water and electricity, 8.2 per cent in trade, 8.6 per cent in transport, warehousing and communications, and 16.8 per cent in real estate.

In contrast, there was a contraction of 14.1 per cent in manufacturing, 8.3 per cent in mining, 3.3 per cent in farming, and 5.2 per cent in financial brokerage.

As a whole, the industrial sector shrank by around six per cent in the first quarter of 2009 while the services sector grew by 7.5 per cent, the report said.

Oman, which is not an Opec member, reported record growth in its nominal GDP last year after oil prices soared to their highest ever average of around $95.

Speaking during a visit to Brunei on Tuesday, Omani Minister of National Economy Ahmed bin Abdulnabi Macki said GDP leaped by around 44 per cent in 2008 while the non-oil sector surged by about 32.6 per cent.

"The expansion in the non-oil sector was a result of high capital spending due to strong oil prices and the acceleration of our economic diversification programmes as part of our long-term strategy to achieve sustainable growth," he said.

Oman, which controls around five billion barrels of proven crude wealth, pumped nearly 780,000 barrels per day of oil in the first five months of this year.

The plunge in crude prices allied with higher actual expenditure to sharply depress its revenue and slash its budget surplus by more than 97 per cent.

The report shows total revenues dipped by nearly 17.8 per cent from RO3,353bn in the first five months of 2008 to around RO2,756bn in the first five months of this year.

Oil export earnings plunged by 30.4 per cent from about RO2,183bn to RO1,520bn.

Gas revenues dropped by 3.3 per cent from about RO333.2 million to RO322.3m while corporate tax income jumped by 64.4 per cent and capital revenues dived by nearly 75 per cent in the same period.

Despite the revenue decline, Oman boosted actual spending in the first five months of 2009 in line with measures aimed at cushioning the impact of the global financial distress by keeping public spending high.

From around RO2,539bn in the first five months of 2008, expenditure grew by 7.6 per cent to RO2,732bn in the same period of this year.

The increase was in both current expenditure, which rose by 4.3 per cent, and in capital spending, which swelled by 17.8 per cent.

As a result, the country's budget surplus dived by 97.1 per cent from around RO813.8m to RO23.8m.

 

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