TASK: Based on the background case above, answer the question below. What appropriate monetary and fiscal policies can you recommend to improve Oman's current economic situation? Justify your answer. 100 word You may add research to your answers to substantiate your report.
TASK: Based on the background case above, answer the question below. What appropriate monetary and fiscal policies can you recommend to improve Oman's current economic situation? Justify your answer. 100 word You may add research to your answers to substantiate your report.
Chapter11: Managing Aggregate Demand: Fiscal Policy
Section: Chapter Questions
Problem 1DQ
Related questions
Question
![OMAN'S ECONOMIC UPDATE
Excerpt from The World Bank (October 2020)
Similar to most economies all over the world, "the
economy of Oman contracted sharply in 2020 amid the
weakness of oil prices and the disruptions from COVID-19.
Fiscal and external deficits will remain under immense strain
due to prolonged low oil and gas prices, elevating public and
external debt. Key risks to the outlook are prolonged low oil
prices, which will induce high external borrowing needs, and
lack of impetus for private sector job creation that does not
depend on government spending.
The drop in oil prices and COVID-19 are placing
unprecedented strain on Oman's economy. While no official
data are available yet on the economy in 2020, preliminary
data issued by the authorities indicate that Oman's nominal
GDP has contracted by 3.9% in Q1/2020 (y/y); non-oil
activities contracted by over 6%. Inflation has reached
negative territory with -0.4% (y/y) in Q2/2020 reflecting weak
domestic demand. The sharp drop in oil prices in 2020 will
take a heavy toll on public finances. Latest data reveals that
total revenues declined by 22% in Q2/2020 (y/y), of which
20% comes from a decline in oil receipts.
The economy is projected to sharply contract by over 9%
in 2020, owing to depressed global demand for oil and the
pandemic hit to the non-oil sector. The new OPEC+ oil cut
agreement is putting significant pressure on the hydrocarbon
sector, which is expected to contract by over 12% this year.
The non-oil economy also faces significant pressure amid
ongoing restrictions, with tourism and hotel sectors are among
the hardest hit. If conditions ease, growth in Oman is projected
to gradually_pick up to an average of 4% in 2021-22, but very
back-loaded to 2022, partly due to a spike from the second phase
of the Khazzan field. Gas field development has been critical
to meet growing domestic and global demand, but it is not on
a scale that is transformative in its own right. Inflation will
likely pick up to around 3% in 2021, reflecting the recovery of
domestic demand and the introduction of VAT".
TASK:
Based on the background case above, answer the question
below.
What appropriate monetary and fiscal policies can you
recommend to improve Oman's current economic
situation? Justify your answer. 100 word
You may add research to your answers to substantiate your
report.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F20ed3994-ca2a-4dd2-9852-369bc489d2d0%2F4c41e421-39d4-4ba1-8266-1b6bfb510093%2Fltsskfg_processed.jpeg&w=3840&q=75)
Transcribed Image Text:OMAN'S ECONOMIC UPDATE
Excerpt from The World Bank (October 2020)
Similar to most economies all over the world, "the
economy of Oman contracted sharply in 2020 amid the
weakness of oil prices and the disruptions from COVID-19.
Fiscal and external deficits will remain under immense strain
due to prolonged low oil and gas prices, elevating public and
external debt. Key risks to the outlook are prolonged low oil
prices, which will induce high external borrowing needs, and
lack of impetus for private sector job creation that does not
depend on government spending.
The drop in oil prices and COVID-19 are placing
unprecedented strain on Oman's economy. While no official
data are available yet on the economy in 2020, preliminary
data issued by the authorities indicate that Oman's nominal
GDP has contracted by 3.9% in Q1/2020 (y/y); non-oil
activities contracted by over 6%. Inflation has reached
negative territory with -0.4% (y/y) in Q2/2020 reflecting weak
domestic demand. The sharp drop in oil prices in 2020 will
take a heavy toll on public finances. Latest data reveals that
total revenues declined by 22% in Q2/2020 (y/y), of which
20% comes from a decline in oil receipts.
The economy is projected to sharply contract by over 9%
in 2020, owing to depressed global demand for oil and the
pandemic hit to the non-oil sector. The new OPEC+ oil cut
agreement is putting significant pressure on the hydrocarbon
sector, which is expected to contract by over 12% this year.
The non-oil economy also faces significant pressure amid
ongoing restrictions, with tourism and hotel sectors are among
the hardest hit. If conditions ease, growth in Oman is projected
to gradually_pick up to an average of 4% in 2021-22, but very
back-loaded to 2022, partly due to a spike from the second phase
of the Khazzan field. Gas field development has been critical
to meet growing domestic and global demand, but it is not on
a scale that is transformative in its own right. Inflation will
likely pick up to around 3% in 2021, reflecting the recovery of
domestic demand and the introduction of VAT".
TASK:
Based on the background case above, answer the question
below.
What appropriate monetary and fiscal policies can you
recommend to improve Oman's current economic
situation? Justify your answer. 100 word
You may add research to your answers to substantiate your
report.
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