As is the case with other Gulf countries, Oman’s recent economic growth owes much to an effective mix of hydrocarbons production, government spending and a supportive regulatory environment. Yet, real gross domestic product (GDP) growth in the country is estimated to have fallen to 3.6% in 2014, according to Standard & Poor’s, a drop from previous years when figures regularly exceeded 4.5%. With oil accounting for about half of Oman's GDP as well as three quarters of government revenue, the recent price drop in the commodity, if sustained, is likely to hit Oman’s fiscal position and growth trajectory over the longer term.
The country's relatively high cost of oil production, along with elevated government expenditures, has seen its fiscal break-even price increase from about $78 a barrel in 2011 to about $100 a barrel in 2014, according to the International Monetary Fund. As such, budget deficits are expected in the coming years. For now, however, the government is planning to push ahead with an expanded 2015 budget, which includes significant spending on infrastructure to stimulate private sector growth.
