By Andy Sambidge
International Monetary Fund says it remains 'broadly positive' about medium-term despite protests
Oman's economy has weathered the global economic downturn well, with growth starting to rebound, the International Monetary Fund has said.
The IMF's executive board said it remained "broadly positive" about medium-term economic prospects in the sultanate despite the recent protests by workers demanding better pay and conditions.
In a new public information notice on Oman, the IMF said growth rebounded last year, with a pick-up in the non-hydrocarbon sector.
In 2009, strong hydrocarbon growth was offset by a decline in the non-hydrocarbon sectors, particularly wholesale and retail trade, resulting in headline growth of 1.1 percent.
But the IMF said in 2010, hydrocarbon and non-hydrocarbon GDP growth are estimated at 6.2 and 3 percent, respectively.
"Continued public investment should help non-hydrocarbon GDP growth move toward a medium-term rate of 6.5 percent while inflation is projected to remain low," it said.
It added that inflation is estimated to be about 3.5 percent in 2010, driven largely by higher prices for imported food.
The fiscal balance is estimated to have improved significantly — from a deficit of 1.2 percent of GDP in 2009 to a surplus of 6.2 percent in 2010, the IMF's executive board said, adding that the turnaround was largely attributable to increased oil prices and oil output.
Oman's banking system, the IMF report said, had proved resilient and maintained profitability in the first nine months of 2010.
And the IMF did not see recent political and economic protests having a major impact on the outlook.
"Since the Board discussion took place, uncertainty in the region has increased, with possible implications for the medium-term outlook. Notwithstanding, the medium-term outlook is broadly positive, reflecting improvements in the external environment and strong public investment," it added.
Directors did observe that the main medium-term challenge was to "achieve economic diversification through sustained reform efforts".
They said that strong and sustainable growth in the non-hydrocarbon sector would be necessary to provide employment for the rapidly growing population.