18 July 2016
Muscat - The sultanate's trade exposure to the China is high relative to other GCC countries due to our export dependence on the world's second-largest economy, according to the Central Bank of Oman (CBO).

In its recently released Financial Stability Report 2016, the central bank said the transmission mechanism of the international market's volatility to Oman is unclear. It said the sultanate, however, is exposed to three main international risks: Large exposure to China, exposure to oil prices and the US Federal Reserve's monetary policy.

The CBO said Oman's exposure to China is quite high relative to other GCC countries. "In our calculations, Oman's exports to China as a share of sultanate's total exports in 2014 and 2015 were 42 per cent and 39 per cent, respectively, which is three times the GCC average," the CBO said.

According to the IMF, Oman's average yearly exports to China as a share of its total exports stood at 26 per cent during the period from 2000 to 2014, while the GCC average was 7.7 per cent.

"Oman's exposure to China is more than three times the GCC average," CBO said.

The CBO noted that growth in China, however, is higher than earlier estimated by the IMF. "China is major trading partner of the sultanate. Anticipated improvements in the Chinese economy should reflect well on the sultanate's economy and financial stability," it said.

The CBO added that Oman's banking system is small, less exposed to international markets and well regulated, so it does not expect significant change in volatility.

© Muscat Daily 2016