Oman Registers RO964.8 Million Budget Surplus
Registering one of the Sultanate’s largest budget surpluses on record, Oman reported a RO964.8 million surplus for 2011, mainly due to higher oil prices driving revenue beyond the budgeted forecasts. Oman’s Ministry of Finance released data indicating that public spending increased by almost 8.8 percent as a result of a 59 percent jump in oil export revenue and an increase in crude production.
Actual revenues increased by around 44.6 percent, up from RO7.91 billion to RO11.43 billion. United Securities senior manager of research Joice Mathew stated that the Sultanate’s policies produced a sustained vehicle for economic development, with economic growth coming in at about 7 percent in 2011. Oman seemed mainly unaffected by unrest within the global markets.
The 2011 Omani budget predicted an average price of $58/barrel for oil, with production levels at 896,000 bpd. As a result of climbing oil prices, the Sultanate expects to increase spending within the latest development plan by more than 100 percent.
Gas earnings for 2011 increased, while security, civil ministries and investment expenses grew. Development expenditures were higher, along with subsidies.
Total expenditures for the current fiscal year are estimated to come in around RO10 billion, representing a 23 percent increase over the original 2011 budget. Human development continues to be a main focus of the Omani government.
Saudi Companies Within Nonoil Private Sector Benefit From Healthy Market Demand
A recent report outlined the benefits that non-hydrocarbon private sector firms in Saudi Arabia enjoyed throughout March. Output increased as steady market demand drove new orders higher.
The March 2012 PMI (or Purchasing Managers’ Index) from the Saudi British Bank (or SABB), in cooperation with HSBC, outlined positive conditions.
The report covers economic performance within the Kingdom’s non-oil private sector, following several variables such as employment, stocks, prices, orders and output.
It was clear that the budget stimulus played a role in strengthening demand within the Kingdom, while increasing oil prices helped boost spending across the GCC.
Although the PMI for March registered at 58.7, down slightly from the February result of 59.6, the findings confirm that the nonoil private sector in Saudi Arabia continues to experience strong improvements in operations.
Economic conditions were positive around the GCC region, providing a key driver for healthy market demand throughout March, based on the findings stated in the SABB report.
Incoming new work increased sharply, although it was the slowest increase recorded over the last three months.
Foreign demand remained steady, although evidence pointed to a rise in exports to clients within the Middle East and a decline in spending from clients within the Euro-zone.
Capacity was under pressure in March, due to rising demands. And although employment increased over the same time period, backlogs continued to rise at a steady pace.
Many businesses held off on production in order to prepare for new work, according to the report findings.
As current new work inflows remained strong, and greater demand is anticipated, nonoil private sector companies in Saudi Arabia increased buying activities during the month of March. This increase led to greater levels of input stocks.
In spite of rising inputs demand, delivery times for suppliers shortened throughout the month. On the other hand, improvements in vendor performance came in at the weakest level in six months.
Competition and efficiencies at the supplier level were cited as the main reasons for shortened delivery times.
Nonoil private sector businesses in the Kingdom faced lower levels of input price inflation in March, after a nine-month high was recorded in February. Increased purchase prices provided the main driving force in overall input cost inflation.
Higher prices for raw materials, foodstuffs and fuel put pressure on purchasing prices in March.
Staffing costs rose in March, albeit at a slower rate. Businesses within this sector increased their charges last month.
Output price inflation reached an eight-month high, with indications that businesses were finding ways to pass on the burden of higher costs while favourable market demand continued.
GDP in the UAE to Hit $358 Billion This Year
The UAE economy is set to reach record levels, reaching $1.46 trillion with 4.6 percent real growth. The GDP of the UAE should reach a record high of $358 billion (current prices) for this year, continuing to hold second place in the Arab world, behind Saudi Arabia.
Those levels have the UAE accounting for over one fifth of the combined GCC GDP, estimated to hit another record high of $1.46 trillion in 2012, according to reports from the FGCCI (or Federation of GCC Chambers of Commerce and Industry).
The GDP of Saudi Arabia should hit $633 billion, with Qatar’s GDP hitting $197 billion, Kuwait’s GDP at $181 billion, Oman’s at $77 billion and Bahrain’s at $26 billion. Projected GDP growth for the GCC stands around 7 percent in current prices, with real growth expectations standing at 4.6 percent.
The report stated that the UAE will see the region’s lowest levels of growth in terms of real GDP, with expectations at 2.4 percent for 2012. Real GDP growth is estimated at 3.8 percent in both Kuwait and Saudi Arabia, with 3.4 percent growth expected in Bahrain and 4.4 percent expected in Oman. Qatar, the largest LNG exporting nation in the world, is expected to experience 9.8 percent in real GDP growth.
On the finance side, robust oil prices are expected to create enormous surpluses in the current accounts of all GCC members, with the UAE current account surplus forecasted to reach $29 billion. Saudi Arabian surplus should reach $124 billion, with Kuwait coming in at $62 billion, Qatar’s surplus reaching $41 billion, Oman’s reaching $8 billion and Bahrain coming in with a $2 billion current account surplus.
Goods exports are forecasted to decline this year, reaching about $850 billion and down from the 2011 figure of $930 billion, mainly due to lower crude output and prices. Goods imports are expected to increase, moving from $483 billion to hit $578 billion in 2012. According to the report, oil prices will fall slightly from $112 per barrel last year to $110 per barrel this year.Paul Holdsworth, Staff Writer, Gulf Jobs Market News