There are many good news coming from both economy and finance in Oman. Recently published figures are better than expected in many areas of concern, especially in finance. This is still not a full recovery, but certainly a sign that the darkest moments could be in the past.
Let us start from the economy. Non-oil economy — thus excluding everything related to oil — increased by a very encouraging 5.7 per cent in the first quarter of this year, amounting to RO 5.7 billion.
To put numbers in context, during the same period Bahrain economy contracted by 2.11 per cent overall, with the most significant decline coming in fact from the non-oil economy, down 2.97 per cent.
The most affected sectors for Bahrain were hospitality, with hotels and restaurants losing 20.44 per cent. Meanwhile Bahrain’s oil sector grew by 2.04 per cent during the same period, causing an overall decrease in the GDP of 0.10 per cent from the previous quarter.
In Oman, on the other hand, the oil sector reached RO 1.9 billion, thus contracting by a significant 20.6 per cent, while natural gas went down by 10.4 per cent, reaching RO 320.8 million. These numbers are likely to be revised very soon, as the oil assumption made by Oman was at $45 a barrel for this year, but the current trend seems to be more positive. The assumption also continued at $50 until 2025, with high potential upside.
The negative performance of oil dragged down the GPD overall, despite the good performance of the non-oil activities. The GDP contraction was recorded at 2.5 per cent on Q1. According to the National Center for Statistics and Information the GDP at current prices amounted to slightly less than RO 7.5 billion.
It is important to say that Oman has changed the GDP methodology for preparation and estimation to follow international practices, so the new calculation might be showing a picture set to stabilise in the quarters to come.
Talking about finance, the Central Bank of Oman has announced that foreign assets are on the rise. Exceeding RO 7 billion in early Q2, 2021, a growth by 8.1 per cent was recorded. On the same trend, the total deposits in the private sector increased by 6.8 per cent, with RO 17.2 billion in both Islamic banking and commercial financial products. Over a billion Omani riyals higher than a year prior.
Loans have also increased. A 3 per cent growth brought the total amount loaned from RO 26.4 billion to RO 27.18 billion. I read this as a sign of confidence in the market and readiness to go back to spend. This could easily translate in economic uptrend for day to day activities and inject fresh cash in the pocket of the Omani people.
The international community now sees Oman as more prominent player in the international market. It is also seen as transparent to investors, therefore more appealing for inbound foreign investment. According to the Head of Capital Markets at Gulf Investment Corporation, Raffaele Bertoni: “With the latest issue Oman has refinanced bonds expiring in 2021 and the current public deficit ... allowing the government to concentrate on the budget deficit consolidation,”
Based to Market Derived Signal Score, a model by S&P Global, for the first time in over two years, Oman’s credit rating was not downgraded through the pricing of credit default swaps.
[The columnist is a member of the International Press Association]
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