The sultanate is in a very strong position both financially and politically as the world looks to recover
from the global economic crisis, says David Andrew Singer, assistant professor of political science at Massachusetts Institute of Technology.
Singer, who was in Oman to hold talks with business leaders on his thoughts of how different countries reacted to the financial meltdown and how the global economy could prevent future crises, used the opportunity to better understand the Omani economy, and its success in limiting the local impact of the global downturn.
“Oman is in a very strong position both financially and politically, which I think sets it apart from many of its neighbouring countries. The banking sector here is strong and very well regulated by an authority that has made some good decisions over the past few years. I believe this is one of the reasons why the economy has not had the same problems as certain neighbouring states have.”
Singer believes the Muscat Securities Market (MSM) is in a good position to see growth in the future, and will benefit from moving toward greater integration with other stock exchanges in the Gulf region. “The challenge is that the MSM is relatively small, with low liquidity and diversity,” Singer explained at a roundtable discussion organised by Tawasul Global Connections Center. “This is why it has much to gain from linking to other exchanges in the region,” he added.
Singer said he is impressed by the sound policies taken by the authorities in Oman that helped the country steer through the global financial crisis with minimal impact. “Oman has been very successful in dealing with the international crisis, but it has also been in a position where it did not need to react to the crisis, as a result of previous decisions in lending that had been made.”
With regard to the future, the professor was clear that the sultanate would have to commit to the continuation of its development in infrastructure, pointing out that Oman needs “to push ahead aggressively on its development plans, in order to take advantage of its position of strength” that it has gained during the crisis.
“Oman’s natural resources for tourism, a continuation of the drive for transport infrastructure, and the ports being a tremendous resource can all combine to create a better economic future, as well as keeping the money in Oman.”
Singer said Oman’s economy would benefit immensely with better transport infrastructure. Introduction of railway lines between the sultanate’s major manufacturing areas and to other GCC states would offer far greater opportunities for the industry to thrive.
Singer was confident of the success the Ministry for Tourism’s plans to enhance the contribution of the tourism sector to the country’s economy. “Oman offers something very distinctive to the region’s tourism sector.” He felt the success of tourism within the sultanate would ultimately whittle down to the issue of branding. “I believe the success of tourism industry is more of a question on Oman’s brand and what is offered compared to other destinations in the region.”
The roundtable discussion, aimed towards looking at the new developments in international financial regulation and national monetary policy as a result of the global financial crisis also considered the global effects of the crisis, and how the global economy will eventually recover.
“Next year, we will see a fairly level rate of unemployment before it gets any better,” Singer speculated. “I think 2010 will be a fairly flat year in terms of investment. In 2011, we will start to see signs of a global recovery, but with emerging economies leading the way.”
Singer also expressed his belief that China’s continuation of undervaluing its currency, Yuan, may cause future problems. “China’s development policy is driven in part by keeping its currency undervalued, which is not easy to implement. This needs to change so that the country becomes less export dependent.”
|