Outlook for 2011-12

• Oman's long-established political structures will remain stable under the rule of the sultan, Qaboos bin Said al-Said, who celebrated 40 years in power in July. The greatest risk is likely to be uncertainty over who will succeed him.
• The country remains vulnerable to the effects of any future confrontation over Iran's nuclear programme, given both the sultanate's proximity to Iran and the stationing of Western military bases on its territory.
• Economic policy over the forecast period will focus on diversifying the economy away from its reliance on the hydrocarbons sector and on meeting the employment needs of a young and fast-expanding population.
• Oman will not join the planned Gulf Co-operation Council (GCC) single currency. Instead, it will retain its currency peg to the US dollar.
• The Economist Intelligence Unit estimates that Oman's real GDP grew by 4.1% in 2010, driven by rising oil prices and production. Real GDP growth will accelerate further over the forecast period, to an average of 4.5%.
• We forecast that average consumer price inflation will increase to 4.5% in 2011 as food prices rise, but will fall to 4.1% in 2012 as prices stabilise.
• The current account is expected to record surpluses over the forecast period, driven by higher oil production and prices. We forecast an average surplus of 4% of GDP in 2011-12, up from an estimated 3% of GDP in 2010.

Monthly review

• The GCC has concluded its two-day annual summit, which was held in Abu Dhabi. One of the key items of discussion was the 2,100-km GCC rail network, which is expected to be completed by 2017.
• Preliminary results of the 2010 census conducted in mid-December show an increase of 15% in total population, compared with the last census in 2003. However, this is much lower than the most recent mid-2009 estimate.
• The national economy minister, Ahmed bin Abdulnabi Macki, has presented the details of the eighth five-year development plan (2011-15), revealing a fourfold increase in expenditure on new and ongoing projects.
• Details of the 2011 general budget were released alongside the eighth five-year development plan. Government revenue is estimated at OR7.3bn (US$19bn), with expenditure put at OR8.1bn.
• High oil prices enabled the sultanate to achieve many of the targets for the previous five-year plan (2006-10). The plan was also based on a very conservative oil price of US$30/barrel. Actual oil prices averaged US$73/b.