Oman’s nominal GDP falls 14.2% in first half of 2015

Muscat: Oman’s nominal gross domestic product (GDP) fell 14.2 per cent during the first half of 2015, compared to the same period last year, due to lower crude oil prices in global markets and subdued global growth, according to the monthly report issued by the Central Bank of Oman (CBO).
The petroleum sector (in GDP) declined substantially, by 38.2 percent, while the non-oil sector witnessed a modest growth of 3.7 percent. Oman’s fiscal balance also shifted from surplus to deficit during the period, in the wake of the significant drop in crude oil prices.
Also, inflation continued its downward trend, with the average consumer price index (CPI) for the Sultanate at a mere 0.08 percent during January-November 2015, over the corresponding period in 2014.
Further, the current account balance also recorded a deficit during the first two quarters of 2015. However, the growth of monetary aggregates in the Sultanate continued its rising pattern, despite the decline in crude oil prices, which commenced in the second half of 2014.
The CBO report also pointed out that the total assets of conventional commercial banks increased by 15.1 percent to RO28.5 billion in November 2015, from RO24.7 billion a year ago. Of these total assets, credit disbursements accounted for 64.6 percent and increased by 9.3 percent at the end of November 2015 to RO18.4 billion. Credit to the private sector increased by 10.3 percent to reach RO16.2 billion at the end of November 2015.
Of the total credit issued to the private sector as of the end of November 2015, the share of the non-financial corporate sector stood at 46.8 percent, closely followed by the household sector (mainly under personal loans) at 45.3 percent, financial corporations at 5.4 percent and other sectors making up the remaining 2.5 percent.
The CBO report also added that commercial banks’ overall investments in securities increased by 3.4 percent to RO2.9 billion, at the end of November 2015, from RO2.8 billion a year ago.
Further, investment in Government Development Bonds increased 79 percent over the year to RO831.5 million at the end of November 2015. Banks also invested RO425.3 million in Government Treasury Bills by the end of November 2015. Commercial bank investments in foreign securities stood at RO776.4 million in November 2015, registering an increase of 10.2 percent over the year.
The CBO report also pointed out that aggregate deposits held with conventional banks registered an increase of 3.9 percent to RO18 billion in November 2015, from RO17.3 billion a year ago. Government deposits with conventional banks increased by 0.8 percent to RO5.1 billion.
Deposits of public enterprises increased by 17.6 percent to RO1.1 billion during the same period. Private sector deposits, which constituted 64.7 percent of total deposits with conventional banks, increased by 4.3 percent to RO11.6 billion in November 2015 from RO11.2 billion a year ago.
Sector-wise, the share of households was 50.3 percent of the total private sector deposit base, followed by nonfinancial corporations at 28.1 percent, financial corporations at 18.8 percent and other sectors at 2.8 percent.
The CBO report added that Islamic banking entities provided financing of RO1.64 billion through November 2015, when compared to RO one billion a year ago. Total deposits held with Islamic banks and windows also registered a significant increase, to RO1.5 billion in November 2015 from RO0.5 billion outstanding at the end of November 2014. The total assets of Islamic banks and windows combined amounted to RO2.2 billion, as of the end of November 2015, which constituted some 7.1 percent of banking system assets.
The CBO report also said that the combined balance sheet of conventional and Islamic banks (other depository corporations) 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 RO20 billion, as of the end of November 2015, a rise of 12.5 percent over the level witnessed a year ago. Total deposits also registered a significant growth of 9.2 percent to RO19.5 billion as of the end of November 2015.
Through November 2015, narrow money stock (M1), when measured on a year-on-year basis, grew by 9.6 percent to RO5.4 billion. This rise was a result of an increase in currency with the public by 11.9 percent, coupled with an increase in Omani Rial designated demand deposits of 8.9 percent.
The report also added that quasi-money (RO savings and time deposits, certificates of deposit issued by commercial banks, margin deposits and foreign currency denominated deposits) witnessed a growth of 9.3 percent during the period.
Meanwhile, broad money supply M2 (i.e. M1 plus quasi-money) stood at RO14.9 billion at end of November 2015, up from RO13.6 billion a year ago, registering an increase of 9.6 percent during the period.
In respect to domestic interest rate structures of conventional banks, both deposit and lending rates softened during this period. The weighted average interest rate on RO deposits declined from 1.006 percent in November 2014 to 0.904 percent in November 2015, while the weighted average RO lending rate decreased from 5.118 percent to 4.763 percent during the same period.
Additionally, the overnight Omani Rial domestic inter-bank lending rate firmed up to 0.153 percent in November 2015 from 0.127 percent a year ago.