(MENAFN- Muscat Daily) The World Bank has projected Oman's real GDP growth at 4.9 per cent in 2014 and five per cent in 2015, according to World Bank Group's latest regional economic update on the Middle East and North Africa (MENA) region.
The World Bank projects growth in the MENA region to accelerate from an average of 2.6 per cent in 2013 to 3.3 per cent in 2014 and then further to 4.6 per cent in 2015.
The report said that the oil exporters in the MENA region, especially the GCC countries, are expected to lead the regional recovery with growth reaching 3.5 per cent in 2014 and 4.8 per cent in 2015.
"Large stimulus packages in the GCC countries, together with the flow of funds to the rest of the exports region, particularly Egypt and Jordan, will continue to boost regional growth rates as capital and current spending continue to rise," the report said.
The World Bank said that the pace of economic recovery will vary across countries within the region. Growth in the GCC countries is expected to remain on a sustainable path, exceeding four per cent in 2014 and 2015. It added that large fiscal spending has, however, made the GCC countries vulnerable to negative oil price shocks.
The IMF had recently estimated that most of GCC countries needed an oil price higher than US$90 per barrel to balance their budget.
"An adverse scenario in which oil prices decline to US$90 per barrel could increase fiscal pressures, particularly in Bahrain (which is already running a fiscal deficit), and Oman (with fiscal deficits expected in 2014 and 2015), given their high fiscal breakeven prices of over US$130 and US$100 per barrel, respectively, and declining oil production, and to some extent in Saudi Arabia and the UAE, going forward," the World Bank report said.
According to the World Bank report, Oman is expected to post a fiscal deficit of 2.7 per cent of GDP in 2014, with the deficit to rise further to 6.3 per cent in 2015. The World Bank also expects Oman's current account balance to decline from an estimated 7.6 per cent in 2013 to 0.8 per cent in 2014 and then to a further low at -8.3 per cent in 2015.
Last week, the IMF in its World Economic Outlook 2014 had estimated Oman's real GDP growth to be at 3.4 per cent in 2014 and 2015, which is IMF's lowest estimates for Oman since 2009 and lower than World Bank projections.
In its state budget for 2014, the Oman government had estimated economic growth of five per cent in 2013 and the same target has been set for 2014. The 2014 budget estimates a deficit of RO1.8bn, which is six per cent of the sultanate's GDP.
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