BMI View: Growth in Oman's construction industry will come primarily from investment in transport infrastructure projects and the government's push for public-private partnership s to mobilise private investment into the construction sector. This will become increasingly important as global oil prices remain low, curbing government spending.
Latest Updates And Structural Trends
We have revised down our construction industry growth forecast for Oman in 2016 from 3.9% to 2.41% in real terms, reflecting the negative impact of sustained low oil prices. Our Oil & Gas team again revised downwards its Brent oil price forecast this quarter, forecasting Brent to average USD40 per barrel (bbl) in 2016, after an average of USD97.2/bbl in the last five years.
The government's push for public-private partnerships (PPPs) will be key to increasing private sector investment in infrastructure and this is critical for the country's future economic development, given the new oil price environment.
We forecast gross fixed capital formation (GFCF) to average 4.6% over the next five years, compared to the 7.9% in the last five years. This difference reflects our more moderate construction industry growth forecast in the short-to-medium term.
Oman's transport sector has been experiencing significant expansion and this is set to continue - following the government announcement in October 2013 the country will spend over USD50bn in infrastructure projects over the next 15 years. From this budget, USD20bn is earmarked for the transport sector - including Oman National Railway - which is where we see the strongest pipeline of projects. Particular opportunities lie in the development of the country's road and railway network.
The Omani government's anti-corruption campaign has been extensive by Gulf standards and will continue in the years ahead. These efforts will strengthen the sultanate's business environment, attracting private investment in the construction industry.
|e/f = BMI estimate/forecast. Source: Central Bank of Oman, Ministry of National Economy, BMI|
|Construction industry value, OMRbn||2.15||2.21||2.32||2.47||2.67||2.85||3.04|
|Construction Industry Value, Real Growth, % y-o-y||4.65||2.44||3.21||4.36||4.86||3.83||3.59|
|Construction Industry Value, % of GDP||8.0||8.1||8.2||8.3||8.5||8.6||8.7|
Oman remains in third place in our regional RRI for the Middle East this quarter, with a score of 66.3 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.
The government's plan to boost the use of PPPs will see the Oman's Industry Rewards score strengthen further.
|Geography||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).
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Analysis of the major strengths, weaknesses, opportunities and threats within the infrastructure and construction sectors and within the broader political, economic and business environment.
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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).
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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.
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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.
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