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Oman Country Risk Report Q1 2020

Oman Country Risk Report Q1 2020

Much like in the rest of the Gulf Cooperation Council, our shift to a bearish oil price outlook for the next five years will have a negative impact on the Omani economy.

The budget will suffer most noticeably with contracting oil revenue growth, meaning that the fiscal deficit as a share of GDP will be wider in 2019 and 2020 than the level recorded in May.

The government will most likely restrain spending growth in response, negatively affecting economic growth. Weaker capital spending in particular will have negative knock-on effects on the economy, and we expect real GDP growth to decelerate in 2019 and 2020.

Similar to the budget deficit, the current account deficit will remain fairly wide on the back of weaker oil prices, although a contraction in imports will temper this to some extent.

Oman's labour force nationalisation efforts will likely intensify over the coming years as the government seeks to reduce the impact of fiscal cutbacks on the citizen population.

Key Risks

The eventual succession of Sultan Qaboos bin Said al-Said, who exercises virtually absolute power over Oman, could result in political and economic uncertainty given that there is little uncertainty on who will succeed him.

A global recession, while not our core view, could exert further downside pressure on oil prices and raise government borrowing costs, with negative implications for medium-term economic growth and macroeconomic stability.


Executive Summary
Core Views
Key Risks
Country Risk Summary
Economic Risk Index
Political Risk Index
SWOT
Economic – SWOT Analysis
Political – SWOT Analysis
Economic Outlook
Economic Growth Outlook
Poor Outlook For Growth
GDP By Expenditure Outlook
TABLE: GDP GROWTH FORECASTS
TABLE: GOVERNMENT CONSUMPTION FORECASTS
TABLE: PRIVATE CONSUMPTION FORECASTS
TABLE: FIXED INVESTMENT FORECASTS
TABLE: NET EXPORTS FORECASTS
External Trade And Investment Outlook
Import Slump To Support Current Account Balance
Outlook On External Position
TABLE: CURRENT ACCOUNT BALANCE FORECASTS
Monetary Policy Framework
TABLE: MONETARY POLICY FORECASTS
Fiscal Policy And Public Debt Outlook
Fiscal Deficit To Widen Again
Structural Fiscal Position
TABLE: FISCAL AND PUBLIC DEBT FORECASTS
10-Year Forecast
The Omani Economy To 2028
Diversification Drive Crucial To Long-Term Growth
TABLE: LONG-TERM MACROECONOMIC FORECASTS
THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS MACRO RESEARCH and is NOT a comment on Fitch Ratings’ Credit Rating. Any comments or data included in the report are solely derived from Fitch Solutions Macro Research and independent sources. Fitch Ratings’ analysts do not share data or information with Fitch Solutions Macro Research.Oman Country Risk Q1 2020ContentsPolitical Outlook
Domestic Politics
GCC Labour Force Nationalisation Schemes Likely To Advance, But Not At 'All Costs'
Long-Term Political Outlook
Succession Question Clouds Political Future
Operational Risk
TABLE: OPERATIONAL RISK
Economic Openness
TABLE: TARIFF AND NON-TARIFF BARRIERS
TABLE: FREE TRADE AGREEMENTS
TABLE: FREE TRADE ZONES AND INVESTMENT INCENTIVES
TABLE: BARRIERS TO FDI
Utilities Network
TABLE: ELECTRICITY RISKS
TABLE: FUEL RISKS
TABLE: TELECOMMUNICATIONS RISKS
TABLE: WATER RISKS
Global Macro Outlook
Downside Revisions To Stabilise Somewhat, But Policy Risks Remain
TABLE: GLOBAL MACROECONOMIC FORECASTS (2018-2023)
TABLE: DEVELOPED MARKETS – REAL GDP GROWTH, % y-o-y
TABLE: EMERGING MARKETS – REAL GDP GROWTH, % y-o-y
Index Tables
TABLE: OMAN – MACROECONOMIC DATA AND FORECASTS

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