Outlook for 2011-12

• The protests that started in Oman in late February are unlikely to die down unless the sultan, Qaboos bin Said al-Said, takes concrete steps to address corruption and unemployment and bring in genuine political reform.
• In spite of anti-government protests, the sultan retains genuine popular support. It is unlikely that the protests, which target ministers and powerful businessmen, will produce the same results as those in Tunisia and Egypt.
• 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.
• The government will increase public spending in an effort to appease the protesters. Economic policy over the forecast period will focus on meeting the employment needs of a young and fast-expanding population.
• We estimate that real GDP grew by 4.5% in 2010 as oil production increased substantially. Real GDP growth will accelerate further over the forecast period, to an average of 4.9%, owing to high oil prices.
• We have revised up our forecast for inflation in 2011 to 4.4% owing to a rise in public-sector wages and pensions. We forecast that average consumer price inflation will fall to 3.9% in 2012 as food prices stabilise.
• The current account is expected to record surpluses in 2011-12, driven by higher oil prices and modest production growth. We forecast an average surplus of 5.7% of GDP in 2011-12, up from 3.5% of GDP in 2010.

Monthly review

• The protests turned violent in Sohar in the first week of April. One person was killed and several others injured as the army was brought in to clear demonstrators from the Globe Roundabout.
• Oman's parliament, comprising the appointed Majlis al-Dawla and the elected Majlis al-Shura, has been granted legislative powers as part of the concessions aimed at calming protesters. No details have been disclosed.
• The government has announced the award of a cost of living allowance for all Omani employees in the public sector and an increase in subsidies.
• The commercial sector has suffered a loss of production as Omani employees in many companies have staged strikes in the hope of winning similar concessions to those offered to Omani employees in the public sector.
• The troubled Blue City real estate and tourism project has been bought by the Omani government from Essdar, a Dubai-based investment company.