Yemen / Taiz City - Apr 12 2019: Massive destruction caused by the war and damaged most of the cities and neighborhoods of the city.

 Omani government trying to avoid becoming the next Yemen

Oman’s economic challenges

The death of Oman’s Sultan Qaboos last month signified the end of an era of Omani diplomacy and economic modernisation. However, Oman led by Qaboos’s successor Haitham bin Tariq Al Said would like to continue these trends. There are however, a number of several economic challenges and obstacles standing in the way.

Haitham’s other main challenge is to oversee Oman’s transition from an over-reliance on oil revenues to a diversified economy. The Omani population is one of the youngest in the world: 46% of it's citizens are under 19. Policies favouring Omanis in employment for the last 20 years have had limited results, as illustrated by dramatic social inequalities, endemic unemployment, and poverty. The World Bank estimates unemployment among 15-24-year-olds is 49%. Real GDP growth turned negative (-0.9%) in 2017 and remained low in 2019 (0.3%). Since 2015, Oman has run high budget deficits and in 2018 rating agencies Fitch and Standard & Poor’s downgraded Oman’s credit rating to “junk”.

Economic hardship has been an important trigger of dissent in the last decade, including during the 2011 uprisings, the 2012-13 post-Arab Spring protests, and unemployment protests in 2017-18. Indeed, unemployment is an important issue for the sultanate, where 16.9% of nationals were unemployed in 2017 and over 30% for young people.

While the UAE is Oman’s primary economic partner and trade between them is only likely to grow further in the years to come, Oman remain uneasy, and Oman’s decision in 2018 to prohibit GCC nationals from owning property in governorates bordering Saudi Arabia and the UAE reflects Muscat’s worry towards its neighbours, and there are fears that the new sultan might prefer to turn an unfortunate blind eye to the UAE’s imperial ambitions, in the name of Muscat’s need for Abu Dhabi’s money.

More on the UAE and Saudi Arabia will be said in point 2, however, Oman’s challenges in its economy are closely linked to its reliance on other Gulf states for expansion of trade and investment, and hence vital to its growth.

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