April 28, 2011 -
PRLog -- Assessing The Impact Of Declining Production As Sultan Qaboos celebrated his 40th anniversary as Oman's ruler, the country has been reflecting on its development during his reign. Massive strides have certainly been made in all areas of economic and social development, not least in health and education. Women's rights have also improved and government efforts continue to support changes in areas where inequalities still exist, such as property ownership. However, many foreign workers remain excluded from this prosperity and we see little impetus for change on this front, given the twin emphasis on stopping illegal immigration and promoting the employment of local workers over expats. The impact of 2010's higher oil prices is feeding through in Oman and, buoyed by higher revenues, the government has set out plans for a bumper budget in 2011. Spending will be channelled into the development of downstream projects that can take advantage of Oman's existing industrial base, as well as research and development and higher spending on public services. Despite a forecast 13% rise in government spending, the budget will remain firmly in surplus. This will allow room for several more years of spending rises, despite the eventual stabilisation of oil prices over the forecast period. Political Strife Continues Yemen's political strife continues and with the government illequipped to deal with so many challenges at once, it will come to rely increasingly on the US for military aid and technical assistance in counterterrorism operations. Both the US and Yemen adamantly deny any chance of a US military operation on Yemeni soil to target al-Qaeda in the Arabian Peninsula (AQAP). However, following yet another bomb attempt on a transatlantic airliner (two parcel bombs bound for the US were intercepted in the UK and Dubai in October 2010), the US is desperate to prevent the group from strengthening its grip in Yemen. At the very least, we expect an intensification of attacks by US drones on AQAP targets. With the political situation so precarious, Yemen's economy is hardly thriving. We continue to forecast weak growth over the next five years, with an escalation of any one of Yemen's political conflicts posing severe downside risks. All that said, we do highlight some improvements to the business environment which bode well for the economy if and when the security situation improves. Membership of the WTO is likely to be finalised in 2011 which could help boost trade thanks to reforms enacted to secure membership, such as measures to simplify customs procedures.
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