PRLog (Press Release) – Jan 26, 2011 – The minister of transport and communications in Oman signed 10 agreements for about OMR75.8mn (US$196.9mn)-worth of investment in developing civil aviation, ports, roads and land transportation in the country, it was reported in late 2010. The agreements form part of the government's efforts to develop infrastructure to increase the contribution of these sectors to the national economy. Agreements were signed for the development of Sohar Airport, civil aviation houses and personnel training on airport projects.
In the ports and marine affairs segment, the ministry signed agreements for the construction of a harbour and road network in al-Halaniyat Islands and Shinas Port Development. In the roads sector, agreements included development of al-Zahiyah to Uwaifiyah/Qarat al-Milh road, al-Ghamb and al-Jahl road among various other projects. The government is investing in projects to encourage tourism with an improved transport infrastructure.
In January 2009 Oman announced plans for the construction of six new airports and the expansion of the existing airports at Muscat and Salalah. The country has two major ports, the Port of Sultan Qaboos in Muscat and the Port of Salalah. Another up and coming port is the Port of Sohar, located near the Straits of Hormuz, which is undergoing a US$12bn investment project, one of the world's largest port development projects.
Oman's economy remains dominated by the oil and gas sector, and this will be a key element in 2011, affecting the outlook for the country and for its freight transport sector. BMI believes that the country's crude oil output will have peaked in 2010 at around 850,000 barrels per day (b/d), and despite some new finds and increased use of enhanced oil recovery (EOR) techniques, is set to decline slowly from 2011.
On the other hand, we see gas production and consumption on a rising trend. The Sultanate is meanwhile maintaining a foreign-investment friendly policy stance and making some progress diversifying its economy, developing tourism and other sectors. As a result of our analysis, BMI estimates 2010 GDP growth of 4.4% in Oman (after 3.6% growth in 2009).
Our outlook for 2011 is for a less dynamic pace in the context of the 'double dip' slowdown across the global economy, with Omani growth cooling to +2.8%, and then easing back a little further to 2.6% in 2012. In the five years to 2015, we expect growth to average 2.4% a year, implying that Oman will achieve a reasonably steady rate of expansion, but one that will be significantly lower than in the years before the 2009 crisis.
After three consecutive years of steep falls in Omani air cargo volume (down by 29.9% in 2007, 24.4% in 2008 and 30.5% in 2009), we saw a partial recovery in 2010 (estimated growth of 10.7%) which we forecast will accelerate going into 2011, reaching 16.2%, to 51,620 tonnes. BMI believes the driver for this recovery is the government's policy of developing Oman Air (in which it holds the majority shareholding) and seeking to turn Muscat into a regional aviation hub.
Against the background of a weak recovery in global trade, Oman's main bulk port at Sohar will see tonnage growth of 8.8% in 2011 to reach a total of 13.696mn tonnes. A key factor in this growth is the development of non-oil related dry bulk demand, as Oman positions itself as an aluminium exporter and transhipment hub for iron ore.
In real terms, Oman's foreign trade growth slumped to 1.4% in 2009, remained at a similar low level in 2010 (estimated growth of 1.3%) and is set to pick up pace marginally in 2011 (+1.9%). In nominal terms, we are expecting imports to total US$27.37bn in 2011, with exports ahead at US$33.34bn. Oman will therefore continue to register its habitually sizeable trade surplus.
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