Oman: dollar peg to stay intact but growth to be weak

The fall in oil prices since late last year has cast the spotlight on to Oman’s weak balance sheet and caused the rial to come under pressure. The country’s neutral stance in regional politics means it is less certain that it will receive financial support from the rest of the Gulf, as Bahrain did last year, although we think it will ultimately get a bailout. As a result, the dollar peg should remain intact but fiscal austerity will need to be stepped up and GDP growth is likely to be weaker than most expect in 2019-20.