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Oman Country Risk Report Q4 2018

Oman Country Risk Report Q4 2018

Real GDP growth will accelerate in Oman over the coming quarters, as natural gas and oil production boost exports, while rising oil prices support greater govern-ment spending. Growth will be further underpinned by rising investment into the non-hydrocarbon sector of the economy, part of the government's economic diversification efforts.

The fiscal deficit will shrink over the coming quarters thanks to broad-based revenue gains, although a return to expenditure growth will moderate the fiscal consolidation. With a persistent fiscal deficit on the horizon, a heavy reliance on oil and rising financing costs, we believe debt risks will be elevated over the coming years.

The Central Bank of Oman will maintain its policy rate differential with the US Federal Reserve in 2018 in a bid to support the currency peg. Higher interest rates will temper inflation ahead of a new 5.0% value-added tax (VAT) in 2019. This will delay a recovery in liquidity, however, which could weigh on non-oil economic growth.

Oman will maintain ties with Iran in the short term, given the two countries' shared economic and strategic interests. Nevertheless, in the face of increasing discontent from GCC neighbours and the US, Muscat will face rising costs from this position.

Key Risks

The sudden death of Sultan Qaboos, who has concentrated power upon himself for many years, would result in political and economic uncertainty given that the succession plan is unclear.

A renewed slump in oil prices would derail Oman's economic recovery plans and put pressure on the country's fixed exchange rate regime.


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
Net Exports & Investment To Boost Economic 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
Outlook On External Position
TABLE: CURRENT ACCOUNT BALANCE FORECASTS
Monetary Policy
Central Bank To Maintain Policy Differential With US Fed To Support Peg, Temper Inflation
Monetary Policy Framework
TABLE: MONETARY POLICY FORECASTS
Fiscal Policy And Public Debt Outlook
Hydrocarbons & Tax Gains To Shrink Omani Fiscal Deficit
Structural Fiscal Position
TABLE: FISCAL AND PUBLIC DEBT FORECASTS
Oman Country Risk Q4 2018Contents10-Year Forecast
The Omani Economy To 2027
Ambitious Diversification Plans, But Challenges Remain
TABLE: LONG-TERM MACROECONOMIC FORECASTS
Political Outlook
Domestic Politics
Oman-Iran Ties To Come Under Pressure
Long-Term Political Outlook
Succession Remains Key Risk To Long-Standing Stability
Global Macro Outlook
Pressure On EM Grows, As Do Divergences
TABLE: GLOBAL MACROECONOMIC FORECASTS
TABLE: DEVELOPED STATES – REAL GDP GROWTH, % y-o-y
TABLE: EMERGING MARKETS – REAL GDP GROWTH, % y-o-y
Index Tables
TABLE: OMAN – MACROECONOMIC DATA & FORECASTS

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