Final full-year 2013 sales data for Oman were unavailable as this report was being compiled. Consequently, we leave our forecasts unchanged this quarter, although we have now extended our forecast period out to 2018, when we believe that annual new vehicle sales should be nearing the 280,000 unit mark.
Certainly, all indications are that 2013 should have proved to be another positive year for new vehicle sales in Oman, with reports that sales were up by 9% as of end-July 2013, at 126,442 units.
BMI retains its stance that the coming years might see an easing in the growth rate of annual new car sales, after the stellar growth seen earlier in this decade in particular. However, this moderation in growth is a positive sign of maturity within the local market.
On the macroeconomic front, BMI's Country Risk team believes that the coming years are set to be a turning point for Oman, as the country edges closer to the final stage of its 1995-2020 long-term economic development strategy. Since 2010, the Omani economy has enjoyed a cyclical boom, with elevated international energy prices and a ramping up of oil production leading to a sharp increase in hydrocarbon income, much of which has been pumped back into the economy. Recently released data from the United Nations Statistics Division shows that real GDP growth reached an impressive 5.0% in annual terms in 2012, marginally above our forecast of 4.9%.
However, such benign conditions are unlikely to last and indeed BMI is predicting a slowdown in growth, to 3.5%, in 2014. With our forecasts calling for Omani oil production to reach a peak in 2015 and with our view that oil prices will trend lower over the medium term, Oman's fiscal outlook is becoming increasingly precarious, and we project budget deficits from 2014 onward. This means that economic activity will not be able to rely on continued fiscal support from the government.
That said, the local auto sales market can rely on continued strong levels of private...