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Reform momentum of Oman’s new ruler faces headwind of COVID-19 reality

Reform momentum of Oman’s new ruler faces headwind of COVID-19 reality

By Davide Barbuscia, Aziz El Yaakoubi and Lisa Barrington



a person wearing a hat: FILE PHOTO: Sultan Haitham bin Tariq al-Said gives a speech after being sworn in, in Muscat


© Reuters/STRINGER
FILE PHOTO: Sultan Haitham bin Tariq al-Said gives a speech after being sworn in, in Muscat

DUBAI (Reuters) – Oman’s ruler has moved to overhaul the Gulf Arab state’s creaking finances since taking power this year but the coronavirus crisis is likely to delay deeper reforms needed to shore up the economy at a time of low oil prices.

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Oman piled up debt at breakneck speed in the past few years, while plans to diversify the small oil producer’s economy and introduce sensitive tax and subsidies reform dragged under Sultan Qaboos who died in January after half a century in power.

New ruler Sultan Haitham has shaken up the government and state entities, and this week approved introducing value-added-tax in April in a sign to investors – ahead of an international bond sale – that he is open to reforms in a country that saw Arab Spring-like protests in 2011.

“This government has to take the tough decisions,” World Bank Gulf country director Issam Abousleiman said.

“If they don’t do anything over the next 3-4 years, and if the situation stays the same on the revenues and expenditures side, they will be forced to do it all at once, risking social backlash,” he said.

The 2011 protests over unemployment, corruption and political reform subsided after Qaboos sacked the government, created thousands of jobs and gave money to the unemployed.

Haitham cannot afford such largesse, and COVID-19 may limit his scope to diversify the oil-dependent economy and put it on a sustainable financial path, analysts and economists said.

A drop in revenue due to lower oil prices has prompted Oman to reduce spending, with major cuts in the first half of the year including investment expenditure.

The hydrocarbon

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Germany’s economic recovery loses momentum as daily cases spike above 5,000

Germany’s economic recovery loses momentum as daily cases spike above 5,000

  • Germany’s growth prospects for 2020 are looking increasingly bleak, with the country’s leading economic research institutes downgrading GDP forecasts for 2020 and beyond.
  • Publishing a joint economic forecast Wednesday, Germany’s leading economists warned that the coronavirus pandemic is leaving what they called “substantial marks” on the German economy.
  • The impact of the virus “is more persistent than assumed in spring.”



a person holding a sign: Advertising figures with a protective face masks in Munich, Germany.


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Advertising figures with a protective face masks in Munich, Germany.

Germany’s economic prospects for 2020 are looking increasingly bleak, with the country’s leading research institutes downgrading GDP (gross domestic product) forecasts for this year and beyond.

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Publishing a joint economic forecast Wednesday, Germany’s prominent economists warned that the coronavirus pandemic is leaving what they called “substantial marks” on the German economy, adding that “its impact is more persistent than assumed in spring.”

They revised their economic outlook downward by roughly one percentage point for both 2020 and 2021. They now expect GDP to fall by 5.4% in 2020 (lower than a previous -4.2% forecast) and to grow by 4.7% (less than a previously forecast 5.8%) in 2021, and 2.7% in 2022.

The “Joint Economic Forecast” is published twice a year on behalf of the German Economy Ministry and is prepared by the German Institute for Economic Research (DIW Berlin) and the Ifo Institute in Munich, as well as several other organizations.

They said the downgrade follows a more pessimistic assessment of the recovery process. “Although a substantial part of the drop in output experienced in spring has already been recovered, the remaining catch-up process is the more difficult part of the return to normality,” Stefan Kooths, head of forecasting at the Kiel Institute, said on the outlook.

The downgrades are not surprising given a second wave of coronavirus cases that is ravaging Europe and

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German economic recovery loses momentum – institutes

German economic recovery loses momentum – institutes

BERLIN, Oct 14 (Reuters)Europe’s largest economy will recover more slowly from the coronavirus pandemic than originally predicted, Germany’s leading economic research institutes forecast on Wednesday.

As Reuters previously reported from sources, the institutes expect the economy will shrink by about 5.4% in 2020, a bigger decline than the 4.2% they forecast in April.

The institutes’ forecast, which forms the basis for the government’s own economic predictions, expects a rebound of 4.7% in 2021, also more pessimistic than their April forecast for 5.8% growth. They expect growth of 2.7% in 2022.

The institute said the recovery was being held back by sectors particularly hard hit by social distancing restrictions such as restaurants, tourism, events and air travel.

“Activity in this part of the German economy will … catch up with the rest of the economy only once measures to control the pandemic have largely been dropped, which we do not expect before next summer,” said Stefan Kooths, head of forecasting at the Kiel institute.

(Reporting by Emma Thomasson Editing by Riham Alkousaa)

((+49 30 2888 5081; Reuters Messaging: emma.thomasson.thomsonreuters.com@reuters.net))

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