Oman’s GDP drops 14% in nine months of 2015

Muscat: Oman’s gross domestic product (GDP) at market price fell by 14.2 per cent in the first nine months of 2015, compared to the same period of previous year, mainly on account of plunging crude oil prices in the global markets.
The oil sector GDP substantially declined by 38.5 per cent while the non-oil sector witnessed a modest growth of 4.7 per cent, mainly emanating from the services sector notably under transport and communication, hotels and restaurants and real estate services. Industrial sectors, such as construction, electricity and water supply and mining and quarrying also registered growth.
The Sultanate's fiscal balance also turned from surplus to deficit during the period, in the wake of the significant and persistent drop in crude oil prices. Inflation continued its downward trend with the average CPI for the Sultanate at a mere 0.06 per cent during 2015 over the previous year.
On the external front, the recent trend in merchandise trade indicates that the current account balance for the first three quarters in 2015 would undergo a major adjustment from surplus to deficit. However, the growth of monetary aggregates in the Sultanate continued its rising pattern despite the decline in crude oil prices. Going forth, however the pace of growth in banking aggregates is expected to show some decline.
The total assets of conventional commercial banks increased by 13.6 per cent to OMR8.2 billion in December 2015 from OMR24.8 billion a year ago. Of the total assets, credit disbursement accounted for 65 per cent and increased by 8.4 per cent as at the end of December 2015 to OMR18.3 billion.
Credit to the private sector increased by 10.2 per cent to reach OMR16.2 billion as at the end of December 2015. Of the total credit to the private sector as at end December 2015, the share of the non-financial corporate sector stood at 46.3 per cent, closely followed by the household sector (mainly under personal loans) at 45.4 per cent, financial corporations at 5.7 per cent and other sectors the remaining 2.6 per cent.
Commercial banks’ overall investments in securities increased by 4.6 per cent to OMR3 billion as at the end of December 2015 from OMR2.9 billion a year ago.
Investment in Government Development Bonds increased by 47 per cent over the year to OMR829.2 million at the end of December 2015. Banks also invested OMR464.2 million in Government Treasury Bills as at the end of December 2015.
Commercial banks’ investments in foreign securities stood at OMR920 million in December 2015, registering an increase of 29.8 per cent over the year. Aggregate deposits held with conventional banks registered an increase of 3.4 per cent to OMR7.9 billion in December 2015 from OMR17.3 billion a year ago.
Government deposits with conventional banks marginally declined by 3.4 per cent to OMR4.8 billion. Deposits of public enterprises increased by 8 per cent to OMR1 billion during the same period. Private sector deposits, which constituted 66.4 per cent of total deposits with conventional banks, increased by 6.1 per cent to OMR11.9 billion in December 2015 from OMR11.2 billion a year ago.
Sector-wise, the share of households was 50 per cent of the total private sector deposit base, followed by nonfinancial corporations at 28.8 per cent, financial corporations at 18.5 per cent and other sectors at 2.7 per cent. Islamic banking entities provided financing to the extent of OMR1.78 billion as at the end of December 2015 when compared to OMR1 billion a year ago.
Total deposits held with Islamic banks and windows also registered a significant increase to OMR1.54 billion in December 2015 from OMR0.7 billion outstanding as at the end of December 2014. The total assets of Islamic banks and windows combined, amounted to OMR2.3 billion as at the end of December 2015 which constituted about 7.5 per cent of the banking system assets.
The combined balance sheet of conventional and Islamic banks (other depository corporations) taken together, provides a complete overview of the financial intermediation taking place in the banking system in the Sultanate.
The total outstanding credit extended by the other depository corporations stood at OMR20.1 billion as at the end of December 2015, a rise of 12 per cent over the level witnessed a year ago. Total deposits also registered a significant growth of 8 per cent to OMR19.4 billion as at the end of December 2015.
As at the end of December 2015, narrow money stock (M1) when measured on year-on-year basis, grew by 11.7 per cent to OMR5.4 billion. This rise was a result of increase in currency with the public by 17.4 per cent coupled with increase in rial Omani designated demand deposits by 9.8 per cent.
Quasi-money (savings and time deposits in Omani rials, certificates of deposit issued by commercial banks, margin deposits and foreign currency denominated deposits) witnessed a growth of 9.1 per cent during the period.
Broad money supply M2 (that is M1 plus quasi-money) stood at OMR15.1 billion at the end of December 2015, up from OMR13.8 billion a year ago, registering an increase of 10 per cent during the period.
In respect of domestic interest rate structure of conventional banks, both deposit and lending rates softened during this period. The weighted average interest rate on Omani rials deposits declined from 0.986 per cent in December 2014 to 0.936 per cent in December 2015 while the weighted average in Omani rials lending rate decreased from 5.080 per cent to 4.762 per cent during the same period.
The overnight rial Omani domestic inter-bank lending rate firmed up to 0.189 per cent in December 2015 from 0.125 per cent a year ago.