The economic activities, which were adversely affected due to the outbreak of the coronavirus pandemic and a steep decline in oil prices earlier this year, have been largely resumed in Oman, but social distancing measures and uncertainty in the absence of a vaccine continue to weigh on the sultanate’s economic outlook, according to the Central Bank of Oman (CBO).
According to the CBO, the enormity of the crisis unleashed by the COVID-19 pandemic has been unprecedented.
‘The pressure experienced by the Omani economy increased as 2020 progressed. Though economic activities have been largely resumed by now, social distancing measures and uncertainty in the absence of a vaccine continue to weigh on the economic outlook,’ the CBO said in its recently released annual report.
The central bank said it would continue to play its due role in supporting growth and stability in the sultanate during these exceptional times.
The Omani economy has been severely hit by the dual shock of lockdowns and a steep decline in oil prices unleashed by the COVID-19 pandemic. Oil prices have since recovered from the historical fall during the current pandemic; however, they continue to remain at a lower level.
‘Since the world economy will take time to return to normalcy, oil prices will continue to remain under pressure, affecting hydrocarbon sector activities in the sultanate. Furthermore, although economic activities have largely been resumed, social distancing and continued spread of the COVID-19 infections would weigh on the recovery process,’ the CBO said.
It said the fiscal measures necessitated by the COVID-19 pandemic would reduce the government expenditure’s support to non-economic activities considerably.
‘Considering the prospects of hydrocarbon and non-hydrocarbon activities, the macroeconomic outlook for 2020 appears to be negative for both sectors. Ultimately, the persistence of the COVID-19 internationally and any significant decline in oil prices could further undermine the outlook,’ the CBO said.
It noted that the overall slowdown in economic activities in conjunction with shrinking job opportunities in the public sector created further pressure on employment during 2019.
While the Omani economy was experiencing an economic slowdown, the CBO said, the dual shock of the COVID-19 pandemic and steep plunge in oil prices during 2020 exacerbated economic vulnerabilities in the sultanate.
‘The standstill of economic activities during lockdown and requirement of social distancing after gradual opening up of the economy resulted in large output loss during 2020 so far,’ the central bank added.
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