Source: Global Investment House
Prudent policies targeting sustainability of growth..
Omani economy witnessed a significant GDP growth rate in 2008 thanks to increasing Omani crude oil prices which averaged US$101.1/bbl for the year. As per Omani official provisional estimates, GDP reached RO23.04bn in 2008 as compared to RO16.01bn, or 44% growth rate. On CAGR basis, Omani GDP scored a record growth rate of 22.7% over the period 2003- 08. As a result of the robust economic growth over the period, GDP per capita followed the same trend reporting a high CAGR of 17.6%. Per capita GDP increased significantly from US$9,190.4 in 2003 to a record level of US$20,648.6 by the end of 2008.
High GDP growth rates were mainly backed by the oil boom over the period 2004-08. This could be depicted from nominal GDP growth rate that continued to follow the same trend as Oman crude oil price. The year 2008 was no different as the reported 44.0% growth rate was backed by oil sector. Both oil production and prices hiked during the year by 6.85% and 55.1% respectively. Needless to mention that world oil prices reported record levels surpassing the US$100/b during 1H08 before declining sharply to dive below US$30/b by the end of 2008 and early 2009. As a result Oman crude oil price was a huge contributor for GDP growth during 2008 as it reported an average level of US$101.1/b for the year 2008, or 55.1% growth over US$65.2/b for 2007. Similarly, oil production increased by 6.85% to 0.79mn b/d by the end of 2008 up from 0.71mn b/d reported for 2007.
A thorough analysis of GDP by sector revealed that “Manufacturing” sector was one of the major GDP contributors. Its contribution has been increasing over years to account for 9.6% of total GDP on average over the period 2003-08. Moreover, it reported a high CAGR of 26.2% over the same period. By the end of 2008, its contribution to total GDP grew by 40.5% standing at RO2,359.5mn. Manufacturing of basic chemicals rather than refined petroleum products were the basic contributors to the sector’s growth over years. Following “manufacturing” sector was “Wholesale and Retail Trade” as a subcategory of the services sector. This category contributed for 8.2% of total GDP on average over the period reporting a CAGR of 24.6%. As a result its contribution increased from merely RO675mn in 2003 to RO2,030.7mn by the end of 2008. Generally, diversification efforts that have characterized the economy since 2003 were the main reasons behind the increasing shares of both manufacturing and services sectors over years.