Increased LNG exports underpinned a positive performance from Oman's economy in 2001, the IMF concluded in its annual Article IV consultation. The gas exports compensated for the fall in oil revenues and contributed to real gross domestic product (GDP) growth of 7.3 per cent (MEED 18:10:02). Total exports changed little despite the fall in oil receipts, but the current account surplus narrowed to about 12 per cent of GDP as domestic consumption and capital spending rose (MEED 26:4:02). An increase in defence spending and in debt repayment meant the fiscal surplus also contracted, and the fund recommended cutting the former (MEED 1:11:02). The non-oil economy showed strong growth through new industrial, power and water projects, and increased private sector consumption. However there was a less favourable assessment of the banking sector, which struggled to cope with a rise in provisioning levels and a string of corporate defaults. The conclusion was that medium term growth outlook is positive, but that the government must push ahead with liberalisation of the economy to stimulate foreign investment and produce sustainable growth.
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