The International Monetary Fund (IMF) has projected the Sultanate’s economic growth at 4.4 per cent during 2015, up from 2.9 per cent the previous year. This comes alongside rating agency Standard and Poor’s estimation on Wednesday of the Gross Domestic Product (GDP) growth by 3.4 per cent during 2015-18, second to Qatar among the Gulf Co-operation Council (GCC) countries.
The IMF came up with its latest forecast where it cut global growth estimate to 3.1 per cent this year. Earlier in May, the agency had projected a growth of 4.6 per cent for the Sultanate which has been brought down now.
It has cited weak commodity prices and a slowdown in China for lower global growth and said that policies aimed at increasing demand were needed. The forecast comes just before IMF annual meeting in Peru this week.
The Sultanate witnessed the highest growth during the last 10 years in 2007 when the rate peaked to 8.2 per cent. The next year it was 6.6 per cent and in 2012 it was 5.8 per cent. The decline in oil prices from the second half of 2014 has been reason for slower growth projections. If the situation remains the same and policies for increasing demand are not taken forward, the situation could worsen.
The IMF growth projection for 2016 for the Sultanate has been put at 2.8 per cent. If the conditions prevail, the growth in 2020 could be 1 per cent, it says.
Inflation has remained subdued. Consumer  price change is projected to be 0.4 per cent but can go up by 2 per cent in 2016 and 2.8 per cent in 2020.
The balance on current account is projected to be in the deficit for the next few years and is expected to be 16.9 per cent of the GDP in 2016, the IMF estimates says.
The S&P report said that government investment spending had provided a strong impetus for economic growth in the Sultanate and other GCC states in the recent past, and “we expect it to remain supportive through 2018”.