(MENAFN- Muscat Daily) Oman's economy is projected to grow 3.4 per cent in 2014 and 2015 according to the International Monetary Fund (IMF) which sees growth remaining generally strong in the GCC countries while lowering growth forecasts for many Arab countries over challenging security conditions.
In its World Economic Outlook report released last week IMF said Oman's economy would maintain a moderate growth rate which will average 3.4 per cent to 2019. However IMF projections are significantly lower than estimates in Oman's state budget which expects the economy to grow five per cent in 2014.
IMF estimates growth in GCC countries to average about 4.5 per cent in 2014-15 with non-oil GDP growing by six per cent and oil GDP rising by 0.5 per cent.
'Activity in the GCC economies accelerated slightly in the second half of 2013 and into 2014 driven by higher oil production and government spending. By contrast although Iran is showing signs of recovery the pace of activity deteriorated in the non-GCC oil exporters where security conditions remain challenging' IMF said.
The Fund said that inflation is expected to remain contained in the GCC in light of softening global food prices and pegged exchange rates. IMF has projected Oman's average inflation to be at 2.8 per cent in 2014 and 2015 against 0.3 per cent in 2013.
It added that the major risk to oil exporters arises from unexpected oil market developments and there are also risks that oil prices could turn out to be lower than expected because of increased oil supply or lower demand.
'Fiscal surpluses are too low in most GCC countries to enable them to save an equitable share of oil wealth for future generations and are expected to vanish by 2017. Fiscal consolidation is thus needed in most oil-exporting countries in the region over the medium term to build buffers against future shocks and ensure that future generations can also benefit from their oil wealth.'
According to IMF Oman's economic growth is projected to be second lowest after Kuwait (1.4 per cent) in the GCC in 2014 while Qatar is projected to record the highest growth of 6.5 per cent this year. Saudi Arabia and UAE are expected to grow 4.6 per cent and 4.3 per cent respectively.
Oman's current account balance which was 11.9 per cent of GDP in 2013 is expected to decline to 9.9 per cent of GDP for 2014 and to 5.6 per cent in 2015 according to IMF.
In a statement to IMF's international monetary and financial committee meeting on Saturday on behalf of Bahrain Egypt Iraq Jordan Kuwait Lebanon Libya Maldives Oman Qatar Syria UAE and Yemen Obaid Humaid al Tayer UAE's Minister of State for Financial Affairs said that GCC countries continue to exhibit robust growth in non-oil sector while oil GDP growth has tapered in line with modest increases in global demand and rising supply in North America.
He said 'These countries are pursuing strategies to re-balance growth towards more productive public spending and to strengthen the non-oil fiscal balance consistent with the objective of preserving the oil wealth for future generations.'
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