Oman Country Risk Report 20 2018
Oman's economic growth will accelerate in 2018 and 2019 largely owing to a recovery in hydrocarbon exports. From 2020 onwards, we expect headline economic growth to remain relatively robust despite a bleak outlook for oil production as the investment in the non-oil sector gathers momentum.
Despite a ramp-up in debt in recent years, we believe that fiscal and debt dynamics will remain sustainable in the short-term thanks to a declining fiscal deficit and range of options for financing the shortfall.
Over the longer term, rising global interest rates and high debt levels will put increasing pressure on government finances, requiring more aggressive fiscal consolidation to ensure sustainability.
Similarly, Oman's current account deficits will not pose significant risks to the riyal-dollar peg in the short-term thanks to several sources of both government and external financing, but persistent shortfalls over the longer term or an external shock could generate increased pressures to devalue.
We expect Oman to remain one of the MENA region's most politically stable nations over the coming quarters. That said, we cannot rule out renewed protests against the government of Sultan Qaboos bin Said al-Said in the medium term if plans to diversify the economy do not bear fruit. We also highlight uncertainty over who will succeed the 77 year old Sultan as a risk to stability in the medium term.
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