GCC (Gulf Cooperation Council) region witnessed a significant turnaround in 2010 as capital markets and oil prices increased and were accompanied by strong domestic demand and prudent fiscal and monetary policies.
Oman's economy, the fifth largest economy in the GCC region witnessed a 4.1 percent increase in real GDP in 2010. Real GDP reached OMR11.6 billion as compared to OMR11.2 billion in 2009. On a CAGR basis, real GDP increased by 6.0 percent during the period 2005-10 with the increase accompanied with higher oil prices, better manufacturing output and growing industrial sector. On a nominal basis, GDP bounced back and jump 23.4 percent in 2010 to reach OMR22.2 billion as compared to OMR18.0 billion enjoyed in 2009. On a CAGR basis nominal GDP increased 13.4 percent during the period 2005-10, according to a report by Global Investment House (Global).
In 2010, economic factors improved strongly and Oman registered a 23.4 percent increase in nominal GDP in 2010, accompanied by oil prices. In 2010, labor sector increased creating 105,124 new jobs, foreign direct investment inflows were positive and domestic demand picked up. Oman produced a strong fiscal policy to beat the crisis which sustained domestic demand in addition to the monetary policy which made liquidity available enabling banks to meet credit demand.
The increase in nominal GDP in 2010 was driven by the petroleum activities. Petroleum activities witnessed an increase in its share of the GDP, reaching 46.4 percent in 2010 as compared to 40.6 percent the previous year. Extraction of crude petroleum jumped 42.5 percent to OMR9.4 billion in 2010 as compared to a 39.1 percent decrease reported in 2009, while natural gas extraction saw a 29 percent increase in GDP in 2010 to OMR912 million. Overall, petroleum activities reached OMR10.3 billion in 2010. The increase in petroleum activities is due to oil prices bouncing back in international markets during 2010. Omani oil prices averaged $76.6 a barrel in 2010 as compared to $56.7 a barrel recorded in 2009.
Unlike other oil producing countries, Oman petroleum activities share of total GDP doesn't exceed 50 percent mark which proves a better diversified economy as compared to other oil producing economies. Petroleum activities reached 46 percent share as compared to 54 percent for non petroleum activities. The share on petroleum activities has been decreasing since 2005 when it was measured at 48.3 percent.
On the other hand, non-petroleum activities which include industry, services and agricultural activities grew its share in total GDP from 50.6 percent in 2005 to 53.6 percent in 2010. Non petroleum activities reached OMR12.3 billion in 2010 as compared to OMR11.1 billion in 2009. Service activities is considered the second largest sector in Oman economy in 2010, its contribution to the GDP reached 37.5 percent and valued at OMR8.3 billion. Services activities increased 11 percent in 2010 due to the increase in its largest segment of whole sale and retail trade, the Global report said.
Wholesale and retail trade is considered the largest sector within the services activities, its share to GDP reached 8.7 percent and 23.3 percent of the services sector. Wholesale and retail trade increased by 12.3 percent in 2010 to reach OMR1.9 billion. On the other hand wholesale and retail trade increased on a CAGR basis of 17.7 percent during the period 2005-10.
Industrial activities make up 30.2 percent of the non-petroleum activities and 16.7 percent of the total GDP. Industrial activities reached OMR3.7 billion in 2010, a 11.9 percent increase from the previous year. Manufacturing sector is considered the largest within industrial activities; it reached OMR2.2 billion in 2010, a 59.2 percent share of the industrial activities and 16.7 percent of the total GDP during the same period. Manufacturing sector increased 18.8 percent in 2010 from previously recorded OMR1.9 billion in 2009. As per the Vision 2020, Oman is planning to increase the manufacturing output of total GDP to 15 percent.
Real estate and construction sectors were the other two main important contributors to GDP in Oman in 2010. They accounted for 4.6 percent and 5.4 percent of GDP over the period respectively.
Agriculture and fishing sector increased by 4.5 percent to reach OMR270 million in 2010. On average, agriculture and fishing contributed for 1.2 percent of total GDP over the period 2005-10 and reported a CAGR of 8.1 percent during the same period.
As per latest data, Omani GDP increased 15.3 percent in Q1, 2011 as compared to the same period a year ago, the Global report said.