Oman GDP falls after slowdown in oil activities

Pexels/Istiaque Hossain

• GDP down 9.5% in Q2
• Oil activities fell 18%
• Oil production rose slightly

Oman’s GDP recorded a fall of 9.5 percent in the second quarter of this year, largely as a result of a slowdown in oil-related activities.

The sultanate’s GDP was OMR10.1 billion ($26.24 billion) in the second quarter, compared with OMR11.1 billion for the same period last year, according to the National Center for Statistics and Information (NCSI).

Throughout the second quarter the value of oil-related activities fell from OMR4.46 billion a year ago to OMR3.64 billion – an 18.3 percent drop.

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Data from the NCSI showed that crude oil activities decreased by 19.5 percent to OMR3.17 billion, while natural gas activities fell 9.2 percent to OMR475.6 million.

The price of Omani oil at the end of July 2023 was $80.5 per barrel, 13.3 percent lower than that in July 2022, according to the latest monthly report from the Central Bank of Oman. 

Average daily oil production, at 1.054 million barrels as of July 2023, had increased by 0.2 percent. 

The total outstanding credit extended by banks in Oman increased 8.7 percent year on year at the end of July to OMR30.3 billion ($78.85 billion).

Most credit was issued to the private sector, which witnessed a 9.3 percent increase compared to July 2022 to reach OMR25.5 billion, Central Bank of Oman figures show.

Non-financial corporations received 45.9 percent of that amount, followed by the household sector (44.5 percent).

The share of financial corporations was 5.9 percent while other sectors received the remaining 3.7 percent.

Total deposits held with other depository corporations registered year-on-year growth of 7 percent to reach OMR27.6 billion.

“Other depository corporations” are depository institutions, excluding the central bank, that issue liabilities included in the national definition of broad money.

These include currency, deposits with an agreed maturity of up to two years, deposits redeemable at notice of up to three months and repurchase agreements, money market fund shares/units and debt securities up to two years. 

Total private sector deposits increased by 6.5 percent to OMR18.2 billion. 

Within that, the biggest contribution was from household deposits at 51.1 percent, followed by non-financial corporations at 30.4 percent, financial corporations at 15.6 percent and other sectors at 2.9 percent.

Oman had one of the lowest inflation rates among GCC countries in 2022, and the IMF expects it to record an average inflation rate of 1.9 percent for 2023.

Growth is forecast to slow from 4.3 percent in 2022 to 1.8 percent this year, according to analysts at BMI, formerly Fitch Solutions.

This is below the 10-year historical average of 3.1 percent before the Covid-19 pandemic, and cuts to oil production are expected to act as a “significant drag” on economic activity.