Brexit needs to be watched closely: Central Bank of Oman

MUSCAT: Oman needs to closely monitor developments in the United Kingdom post-Brexit as it is the Sultanate’s biggest foreign direct investor, the Central Bank of Oman has warned.
The UK currently accounts for 46 per cent of Oman’s Foreign Direct Investment (FDI) and may struggle in the coming years after voters there decided to leave the European Union, according to the central bank’s annual report.
“The British economy may register lower economic growth due to a dislocation of trade and business. Britain is one of the topmost investors in Oman and the authorities have to closely monitor the development as it unfolds,” the CBO said in its report, issued on Monday.
UK market share is growing in Oman and currently worth around £4.5 billion annually. Exports from the UK to Oman are up 10 per cent year-on-year, according to statistics for May, 2016.
Experts said that Oman, like any other country, needs to keep a watch on the situation.
“First we will have to see what impact Brexit will have on the European Union. Only then can we gauge the impact on the Sultanate economy,” Muscat-based financial analyst, Jose Chacko said.
Khalid Al Jashmi, acting general manager of Export Credit Guarantee Agency of Oman (ECGAO) says that he fears “indirect” repercussions.
“For example, our leading business partners in certain areas may want to buy stuff from UK since the pound rate has gone down and things will be a little cheaper. Then it will start hampering us,” he had said.
The CBO’s assertion comes as Oman reels under economic distress, with the government launching austerity measures earlier this year.
The CBO said that the 2016 outlook will be based on various factors, including the movement in oil prices, materialisation of rate hikes by the U.S. Federal Reserve, volatility in global financial markets and the exit of Britain from the European Union.
The report also said after continuous growth in total revenues between 2009 and 2014, Oman recorded an overall fiscal deficit of OMR4,831.4 million in 2015.