BMI View: Deficit spending will help offset the effects of lower oil royalties and will galvanize a return to growth in Oman ' s construction sector after a recession in 2015. Robust structural demand will drive outperforming growth in the power and water subsectors, while a government sponsored economic diversification programme will lay the foundation for a sustained expansion of the country ' s commercial and industrial infrastructure. A prolonged slump in oil prices remains the biggest downside risk to our optimistic outlook for Oman ' s construction sector; however, it is a risk that is attenuated by the government ' s ability to augment its own deficit spending with private investment from an increasingly diverse set of international investors under a Public Private Partnership (PPP) framework.
Forecasts And Latest Updates
We have revised our construction sector growth outlook significantly upward for 2016, from 2.5% to 8.3%, to reflect the latest economic data and more generally, the impact of continued government support for infrastructure projects. Our longer term forecast is similarly optimistic, with a combination of deficit spending and the increasing ability to solicit private investment for infrastructure projects driving an annualized average growth rate of 5.5% over the first half of our forecast period.
The government's economic diversification efforts under the auspices of its 'Vision 2020' plan appear to be bearing fruit, with the Omani government and a consortium led by Ningxia China-Arab Wanfang signing an agreement to develop the USD10.7bn Sino-Oman Industrial City near the port of Duqm, Oman. The 50-year deal will see the consortium develop about 11.7sq km of land in the Duqm Special Economic Zone. The consortium will provide funds for the scheme and plans three separate zones: heavy manufacturing, light manufacturing and a mixed-use area.
Iran and Oman have commenced studies on the deepwater route of a USD1.5bn pipeline that will transfer Iranian natural gas to Oman, with deepwater and shallow water paths being considered for the pipeline. The final route will be decided after studies over the two options are finalised. Iranian Offshore Engineering and Construction Company has been contracted to conduct offshore studies for the project, while Pars Consulting Engineers will study the onshore aspects of the pipeline.
|e/f = BMI estimate/forecast. Source: Central Bank of Oman, Ministry of National Economy, BMI|
|Construction industry value, OMRbn||2.07||2.25||2.43||2.63||2.84||3.03||3.23||3.45||3.64||3.84||4.06|
|Construction Industry Value, Real Growth, % y-o-y||-0.38||8.30||6.50||5.50||4.94||3.90||3.65||3.62||2.59||2.56||2.53|
|Construction Industry Value, % of GDP||7.3||7.8||8.1||8.4||8.5||8.6||8.7||8.8||8.8||8.8||8.8|
Oman falls to fourth place in our regional RRI for the Middle East this quarter, with a score of 64.7 out of 100.
Oman performs particularly well in terms of Industry Risks due to a transparent and attractive competitive landscape that reduces threats to potential investors and tops the region with a score of 82.5.
Oman's fall to fourth place behind the United Arab Emirates in Q4 is largely attributable to declines in the Industry Rewards and Country Risk pillars, which declined to 65 and 57.4, respectively.
|Risk/Reward Index||Rewards||Industry Rewards||Country Rewards||Risks||Industry Risks||Country Risks|
The Oman Infrastructure Report features BMI Research's market assessment and forecasts covering public procurement and spending on all major infrastructure and construction projects, including transportation and logistics by land, sea and air; power plants and utilities, and commercial construction and property development. The report analyses the impact of regulatory changes and the macroeconomic outlook and features competitive intelligence on contractors and suppliers.
BMI's Oman Infrastructure Report provides industry professionals and strategists, sector analysts, investors, trade associations and regulatory bodies with independent forecasts and competitive intelligence on the Omani infrastructure and construction industry.
- Benchmark BMI's independent infrastructure industry forecasts for Oman to test other views - a key input for successful budgetary and planning in the Omani infrastructure market.
- Target business opportunities and risks in the Omani infrastructure sector through our reviews of latest industry trends, regulatory changes and major deals, projects and investments in Oman.
- Assess the activities, strategy and market position of your competitors, partners and clients via our Company Profiles (inc. SWOTs, KPIs and latest activity).
BMI Industry View
Summary of BMI’s key industry forecasts, views and trend analysis covering infrastructure and construction, regulatory changes, major investments and projects and significant national and multinational company developments. These are broken down into construction (social, commercial and residential), transport (roads, railways, ports, airports, etc), and energy & utilities (powerplants, pipelines and so on).
Industry SWOT Analysis
Analysis of the major strengths, weaknesses, opportunities and threats within the infrastructure and construction sectors and within the broader political, economic and business environment.
BMI Industry Forecasts
Historic data series (up to 2012) and forecasts to end-2024 for all key industry indicators, supported by explicit assumptions, plus analysis of key developments in the market and risks to the main forecasts. Indicators include:
Construction: Industry value (USDbn); contribution to GDP (%); total capital investment (USDbn); real growth (%).
Construction industry real growth forecasts (%) and industry value (USDbn) forecasts for industry sectors are split into Residential and Non-residential and Infrastructure sectors. Where the data is available for particular countries the infrastructure is further broken down into indicators for the transport subsectors of roads, railways, airports and ports and the energy and utilities sub-sectors of power plants and transmission grids, oil & gas pipelines and water infrastructure. This dataset is unique to the market.
The reports also include analysis of latest projects across the infrastructure sectors (transport, utilities, commercial construction).
BMI’s Infrastructure Risk Reward Index
BMI’s Risk Reward Index provides investors (construction companies, suppliers and partners) looking for opportunities in the region with a clear country-comparative assessment of a market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points. These provide indices of highest to lowest appeal to investors, with each position explained.
An assessment of the competitive landscape and key challenges to entering the market. Details of the largest companies active in the sector across the sub-segments of the industry, including the key financial figures from some of the largest players in the sector.
Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape to generate company SWOT analyses. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.
The Infrastructure reports draw on an extensive network of primary sources, such as multilateral organisations, government departments, industry associations, chambers and company reports.
*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.