MENA Asset Management Survey 2012 - National Bank of Abu Dhabi

Oman
Economic Background
Higher oil output and price
Data point to average crude oil output of about 913 thousand barrels per day in January-
October 2012, up 3.1% year-on-year. Average oil price in the same period was US$
109.5 per barrel, up 7% year-on-year.
External surplus at record high
The country registered a record trade surplus of US$ 26.2 billion (+ 39.9% y-o-y) in
2011. Value of exports rose to US$ 47 billion (+29% y-o-y) driven by a jump in value of
oil and related exports to US$ 33.3 billion (+32% y-o-y). Foreign exchange inflows were
US$ 50 billion (94% were exports), while outflows stood at US$ 39.7 billion driven by
imports (42% of outflows), remittances, and a deficit in the services balance. The current
account balance registered a record surplus of US$ 10.3 billion (14.2% of GDP)
Forecasts point to current account surpluses of US$ 8.8 billion (11% of GDP) and US$
4.4 billion (5.5% of GDP) in 2012 and 2013, respectively.
Fiscal policy is expansionary
Fiscal policy was expansionary to deal with unemployment which is at the centre of
government focus. Authorities announced 36,000 jobs were created in 2012 and there
were plans to create 56,000 jobs in 2013 of which 20,000 would be in the government
sector. High oil prices and record production allowed the country to record a budget
surplus of US$ 2.6 billion (about 3% of GDP) despite record spending in absolute terms.
Growth is brisk
In 2012, official real GDP growth estimate was 8.3% year-on-year driven by
government expenditures and was significantly higher than earlier projections. Output
growth is expected to moderate in 2013 to about 3.4%.
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