Oman's nominal GDP surges 15% in Q1 on higher oil prices, production

Reflecting higher oil prices and output, Oman's gross domestic product (GDP) at current market prices surged by 15.3 per cent in the first quarter of 2011, while the annual inflation has shown signs of abating in June, according to government data.

Commenting on GDP numbers, Dr Fabio Scacciavillani, chief economist at Oman Investment Fund (OIF), said, “Nominal GDP reacts to international oil prices which remained high in the first half of this year mainly due to the Arab Spring. The growth is mainly due to higher oil prices and increase in oil production.”

Contributing 48.3 per cent to Oman's GDP, petroleum output grew by 17.8 per cent in the first quarter to RO2.97bn compared to RO2.52bn in the same period last year, while non-oil GDP grew by 12.5 per cent to RO3.1bn in the first quarter, at current market prices.

Oman's annual inflation in June eased to four per cent from 4.4 per cent in May as global commodities prices started showing signs of softening.

“International commodities prices are stable at this point of time and in some cases are going down. The global economic outlook is weak which would impact global demand that will keep the prices stable,” Dr Scacciavillani said.

On whether weakness in the US dollar might further boost inflationary pressure in Oman, he said, “Higher domestic prices were more due to higher global food prices and dollar weakness is not a major issue now. The central bank's objective is to keep currency pegged to dollar and it does not have much monetary policy options to counter inflation,” he added.

Liz Martin, senior MENA economist at HSBC Middle East, forecasts Oman's real GDP to grow 3.6 per cent in 2011. “First quarter GDP growth has been good, but it may primarily be a reflection of higher oil prices and output. The second half of the year may be more challenging as the global economy softens. We think Oman's fiscal policy will continue to support growth.”