2011 Saw Healthy Growth For Omani Economy
The economy of Oman experienced vigorous growth in 2011 despite widespread financial crisis in many of the world’s advanced economies. The Minister Responsible for Financial Affairs in Oman, Darwish bin Ismael al Balushi, stated that 2011 growth resulted from growing oil production, advancing prices and the government’s monetary and fiscal policies supporting expansion.
While announcing the 2012 budget the minister reported healthy growth in Oman’s non-oil industries as well. The national economy experienced solid growth based on the non-oil sector’s 10 percent growth rate, much higher than the oil sector’s growth of only 2 percent. Domestic demand also increased, bumping non-oil exports 20 percent higher than the 2010 levels, according to the minister.
In Oman’s budget statement initial GDP forecasts indicate that the economic growth of 7 percent in 2011 surpassed the levels seen in 2010.
Al Balushi stated that expenditures of RO 8130mn in the approved 2011 State General Budget resulted in a deficit of RO 850mn, based on oil prices of $58 per barrel. Omani oil actually hit an average of $108 per barrel. Despite additional approved allocations of RO 1.8bn targeting security and civil expenses, the budgeted deficit amounted to approximately RO 2.6bn.
Oman’s actual budget is forecasted to maintain a surplus of around RO 1bn, mainly as a result of stability in global oil prices. About RO 700mn of that surplus is marked to cover the 2012 budget deficit, while any balance remaining after the accounts have been closed is intended to fortify the State’s financial reserve, according to a statement.
Indicators of inflation have been maintained at 4 percent, despite greater general expenditures throughout the year and the influence of imported inflation. That level is within period targets.
Expected GDP Growth of 4 Percent Set for Abu Dhabi in 2012
Abu Dhabi’s GDP is forecasted to increase by 4 percent in the coming year, reaching Dh 750bn according to statements made by the ADCCI (or Abu Dhabi Chamber of Commerce and Industry).
Revenues from the emirate’s oil sector are expected to contribute Dh 385bn to the increase. Crude oil revenue is forecasted to jump from Dh 309bn in 2011 to Dh 345bn in 2012.
The balance of 2012 oil-related revenue totaling Dh 40bn will come from gas liquefaction and refining.
Improvements in the contribution of the public sector are also forecasted, rising from the Dh 126bn reported in 2011 to Dh 133bn this year.
Estimates from the ADCCI indicate that private sector GDP contribution will increase from Dh 218bn last year to Dh 232bn in 2012.
Statistics from the ADCCI uncover that numerous development projects will be implemented by the private sector across a variety of industries. These events will cause the private sector’s formation of total fixed capital to hit 55.4 percent in 2011 and 54.1 percent in 2012.
Zarouni Group chief analyst Waddah Taha stated that economic diversification is happening quickly in Abu Dhabi, as the non-oil industries increase their share of the GDP for the second consecutive year.
Oil accounted for 49.7 percent of the GDP in Abu Dhabi back in 2010, according to Taha.
$968 Billion in Project Investments Forecasted in the GCC For the Coming Decade
Over the next ten years 1,638 projects across the GCC are expected to see implementation, resulting in $968 billion in investments. These projects are supported by record-high revenues in the oil sector and will affect a variety of sectors within the GCC, according to a report by the Markaz.
According to the report a majority of these projects, more than 80 percent, involve the petroleum industry, construction and infrastructure.
Consistently high oil prices have permitted the GCC member nations to implement investment commitments targeting development and growth projects, as stated in the report.
Execution of these vital projects will require a compatible and clear set of policies and systems that allow for integration and support efficient implementation. Many of the member states have acknowledged the importance of PPPs (or public private partnerships) to accelerate and facilitate these projects, along with other mechanisms such as joint venture agreements and direct foreign investments.
Kuwait will implement 218 of these projects, totaling more than $133 billion spread across the next decade. Despite this nation’s massive financial wealth, it has been reserved in the spending and awarding processes.
It is expected that between 2011 and 2020, $97 billion will be spent in the GCC on new rail and road projects. Rail projects, such as stations, metro, train and tram projects, are forecasted to reach $79 billion including a $30 billion shared cost rail network stretching across the GCC.
The value of ongoing roads projects should total about $18 billion, according to the report.
Many GCC nations are considering or planning their own metro systems, especially after the success of the metro launch in Dubai. A 131km metro system in Abu Dhabi is forecasted to begin in 2015. A pan-GCC rail system is in the works, with an updated value of about $30 billion. This network will include the first rail line linking all the GCC member states. A bridge and one rail line stretching 1,970km will link Qatar and the GCC members. Another line stretching 1,984km will connect the UAE, Saudi Arabia and Kuwait, before ending in Oman. Forecasted land acquisitions for this network total $3.1 billion, while the budgeted purchase of locomotives and trains to ride the network is forecasted at $1.8 billion.
Once the engineering studies have been completed in 2012, work should begin on this network.
Port expansion projects are forecasted at almost $15 billion across the GCC. Implementation of these projects to meet expanding business needs is expected to span the next five years.
Expansion will occur in most of the 35 major ports in the GCC, in order to deal with an approximate 8 percent growth in 2010, where capacity hit almost 25 million TEU’s. According to the report, ports in the UAE handle 59 percent of total GCC volume.
In 2010 Dubai came in as the ninth largest port in the world, while Oman’s Salalah was named 32nd on the list of global ports and Saudi Arabia’s Jeddah captured 30th place, according to the report.
Healthy growth in seaport investments is expected to push capacity even higher. Much of the increased investments have occurred in Abu Dhabi and Dubai, and Markaz noted that other GCC member states have plans to improve port conditions.Paul Holdsworth, Staff Writer, Gulf Jobs Market News