Oman’s gross domestic product falls 5% to OMR25.5b

Muscat: Oman’s gross domestic product (GDP)at market prices fell by 5.1 per cent to OMR25,489.8 million in 2016 from OMR26,850.3 million in the previous year, according to preliminary data released by the National Centre for Statistics and Information (NCSI) on Sunday. The fall in economic activity (or the fall in value of goods and services produced in the country) was mainly due to a drastic drop in crude oil prices in the international markets.
“The major reason for this fall is obviously a decline in oil prices in 2016. Average price of Oman Crude was $40.1 per barrel last year,” said S Suresh Kumar, head of research at Al Maha Financial Services.
As a result, petroleum activities slumped by 23.7 per cent to OMR6,988.8 million in 2016 from OMR9,157.3 million in the previous year. Among the hydrocarbon sector, crude oil activities dropped by 27.5 per cent to OMR5,799.2 million from OMR7,999, while natural gas revenue edged up by 2.7 per cent to OMR1,189.6 million, according to NCSI.
Although there has been a strong focus on non-oil activities, the growth in the sector was at 0.6 per cent at OMR19,282.3 million in 2016, against OMR19,170.7 million in the previous year.“Obviously, the non-oil GDP is gradually showing signs of growth, mainly due to the government’s major focus on tourism, logistics and mining sectors,” added Suresh Kumar.
The manufacturing sector plunged by 17.2 per cent to OMR2,159.1 million from OMR2,607 million, while mining and quarrying rose by 5.4 per cent to OMR139.6 million. This could be due to a fall in prices of commodities, including petrochemical products, minerals and metals.
Agriculture and fisheries sector showed a smart recovery with the activities in the sector surging ahead by 16.3 per cent to OMR506 million from OMR435.2 million.
Further, service sector activities edged up 1.6 per cent to OMR13,644.2 million from OMR13,408.9 million during the period under review.
Suresh Kumar said that the gradual increase in crude oil prices this year would help improve the confidence and will encourage private sector investment. The average price of Oman Crude in the first two months of 2017 was $48.6 per barrel. Oman government has undertaken several measures for reducing budget deficit, which include austerity measures, steps to enhance additional revenue.
These include an increase in corporate income tax from 12 per cent to 15 per cent, removal of a threshold limit, withholding tax on services, dividend and interest income, value added tax from 2018, an increase in electricity charges applicable to large corporate customers and a rise in service charges of customs department.