2012-11-15 00:10:54 - Oman and Yemen Business Forecast Report Q4 2012 - a new country guide report on companiesandmarkets.com
Government spending will be the primary driver of Oman´s growth momentum over the medium term. With oil prices set to remain high throughout the year, and room in the government´s budget for a further ramping up of social spending, we expect the economy to continue growing robustly in the near term. With popular discontent appearing to be on the rise, the possibility of Muscat announcing a new fiscal stimulus package over the coming quarters is high. We would expect any additional expenditure to take the form of current spending (i.e. higher wages or increased subsidies).
Major Forecast Changes
On the back of higher global oil prices, we have revised up our forecasts for Oman´s budget surplus in 2012. We now expect
the budget to come in surplus to the tune of 9.5% of GDP, before falling to 5.2% in 2013.
Key Risks To Outlook
We stress that, for the foreseeable future, Oman´s economy will remain highly reliant on oil revenue. Should prices record a more pronounced drop before the economy has been sufficiently diversified away from the energy sector, our positive outlook might prove overly optimistic. The autocratic nature of the political regime in Oman (and elsewhere in the Gulf) will ensure that risks of an uptick in protest activity by pro-democracy demonstrators remain elevated; such activity would generate uncertainty and deter investors from the market.
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