![minus](/theme_omandailyobserver/images/minus.png)
![plus](/theme_omandailyobserver/images/plus.png)
MUSCAT, SEPT 22 - The Sultanate’s nominal Gross Domestic Product (GDP), after growing at an accelerated pace of 12 per cent during 2018, declined by 1.6 per cent during the first quarter of 2019, the Central Bank of Oman (CBO) stated in its newly published review of Banking & Monetary Developments for the month of July 2019. “The slowdown was pervasive across hydrocarbon and non-hydrocarbon activities, which experienced a nominal contraction of 0.5 per cent each during Q1 of 2019 as compared to a nominal growth of 20.9 per cent and 3.4 per cent, respectively, during Q1 of 2018,” the apex bank noted.
The Central Bank attributed the decline in nominal GDP, emanating from hydrocarbon sector in Q1 of 2019, mainly to the drop in the nominal value of crude oil production following the decrease in international oil prices. The average oil price declined by about 3 per cent to $61.0 a barrel in Q1 of 2019, down from $62.9 per barrel during the same period of 2018, while the daily oil production rose marginally by 0.4 per cent to 970.5 thousand barrels in Q1 of 2019, the report said.
“On the other hand, the contraction in non-hydrocarbon economic activities was driven mainly by non-petroleum industrial activities that recorded a considerable drop in its nominal GDP during this period,” the CBO report noted.
Inflationary conditions continued to be benign as retail inflation averaged 0.3 per cent during January-July 2019 in comparison with 0.8 per cent during the same period of last year.
Referring to the combined balance sheet of conventional banks and Islamic banking entities (other depository corporations), which provides a complete picture of the progress of financial intermediation in Oman, the apex bank noted that total outstanding credit extended by other depository corporations (ODCs) increased year-on-year (YoY) by 6.1 per cent to RO 25.7 billion at the end of July 2019.
Credit to the private sector grew YoY by 3.9 per cent to RO 22.6 billion during this period. The non-financial corporate sector received highest at 46 per cent of the private sector credit, followed by household sector (mainly under personal loans) with 45.4 per cent, financial corporations with 5.3 per cent and other sectors with 3.4 per cent. Total deposits held with ODCs increased by 3.3 per cent to RO 23 billion, with private sector deposits witnessing a growth of 6 per cent to RO 14.9 billion at the end of July 2019.
Households accounted for 49.9 per cent of total private sector deposits, while non-financial corporations, financial corporations, and other sectors accounted for 28.8 per cent, 18.8 per cent and 2.5 per cent, respectively.
Credit extended by conventional banks increased YoY by 4.9 per cent as of end-July 2019, with credit to the private sector growing by 1.8 per cent to RO 18.9 billion. Conventional banks’ overall investments in securities increased YoY considerably by 12 per cent to RO 3.4 billion at the end of July 2019 — investment in Government Treasury Bills stood at RO 231 million, the report said.
Aggregate deposits of conventional banks increased by 2.1 per cent to RO 19.6 billion at the end of July 2019 from RO 19.2 billion a year ago. Government deposits increased YoY by 0.9 per cent to RO 5.3 billion, while deposits of public enterprises decreased YoY by 3.9 per cent to RO 1.1 billion during the period under review.
Financing by Islamic banking entities continued to expand and stood at RO 3.7 billion at the end of July 2019, higher than RO 3.1 billion a year ago. Total deposits held with Islamic banks and windows also increased to RO 3.4 billion from RO 3.1 billion a year ago. The total assets of Islamic banks and Windows combined amounted to RO 4.7 billion and constituted about 13.6 per cent of the banking system assets at the end of July 2019, the Central Bank added.
Oman Observer is now on the WhatsApp channel. Click here