The JPMorgan group downgraded emerging market currencies to “neutral” from “overweight,” citing uncertainty related to global monetary policies and the prospects for artificial intelligence, in the wake of the US midterm elections.
The group said in a note issued on Friday: “While declining cyclical economic momentum is usually a negative factor for emerging market currencies, weakness in stocks of companies related to artificial intelligence may contribute to limiting the exceptional outperformance of the US economy, and put pressure on the dollar,” according to Reuters.
This review reflects a change in the group’s view of emerging market currencies, in light of the intersection of the repercussions of developments related to artificial intelligence with global monetary policy trends.
The International Monetary Fund raised its forecast for the growth of the Omani economy to 4.5 percent during 2026, compared to 4.1 percent in previous forecasts, stressing that the economy has shown strong resilience in the face of the repercussions of the war in the Middle East, supported by the absence of widespread impact on the energy infrastructure, the activity of the logistics sector, the strength of economic foundations, and the continuation of prudent financial policies.
The Fund said, in a statement issued on Monday following the conclusion of its 2026 Article IV consultation mission in Muscat, that economic activity continues to expand, driven by the rise in fuel production and the continued growth of non-oil activities, while inflation has risen due to the increase in the costs of food, transportation and imports.
The statement explained that Oman's real GDP grew by 3.8 percent during the first half of 2026, with the strength of hydrocarbon activities compensating for the decline in the construction, industrial and tourism-related sectors.
In terms of prices, average inflation rose from about 1 percent during 2025 to approximately 3 percent on an annual basis during the period from January to September 2026, mainly as a result of rising food and transportation costs.
On the other hand, public finance and external accounts maintained surpluses during the first half of the current year. The fiscal surplus reached 1.9 percent of GDP, while the current account surplus was estimated at about 3.7 percent. The government debt ratio also declined to 30.4 percent of GDP by the end of June 2026.
The Fund expected that the growth of the Omani economy would accelerate to 4.5 percent during the year 2026, driven by an increase in hydrocarbon activity, in addition to the continued growth of non-hydrocarbon activities by 1.4 percent.
He expected that inflation would average 3 percent during the current year, before gradually declining to about 2 percent in the medium term.
Regarding public finances, the Fund expects the financial situation to continue to be strong, with a general budget surplus recording an average of 5.3 percent of GDP during the years 2026 and 2027. It is also likely that the current account surplus will return to about 6.5 percent of GDP during 2026, and that surpluses will continue to be recorded during the medium term.
The Fund indicated that the fiscal policy during the year 2026 provides appropriate support to contain the repercussions of the war, while maintaining financial discipline, calling for any additional support for the most affected families and viable companies to be temporary, targeted, and transparent, and for it to be financed through rearranging spending priorities.
He stressed the importance of directing any additional revenues resulting from the rise in oil revenues towards rebuilding financial reserves and enhancing the economy’s ability to confront shocks, while providing space for investment in enhancing economic flexibility and diversifying sources of growth.
In the medium term, the Fund called for continuing financial reforms, including strengthening tax administration, gradually eliminating undirected support while protecting the neediest groups, raising the efficiency of public investment, and developing financial frameworks to ensure the sustainability of public finances and enhance the credibility of economic policies.
Regarding monetary policy, the Fund believed that linking the exchange rate of the Omani riyal remains an appropriate and reliable basis for economic policies, noting that completing the monetary policy development project, including activating an interest rate corridor and launching the overnight deposit facility in the Omani riyal, would enhance the transmission of the impact of monetary policy to the economy and develop local money and capital markets.
He also described the banking sector as having good financial solvency, liquidity and profitability, with limited direct exposure to the sectors most affected by the conflict, calling for the continued implementation of the recommendations of the Financial Sector Assessment Program for 2025, strengthening macro-prudential frameworks, and completing the activation of financial safety networks and crisis management arrangements.
The Fund stressed that the escalation of uncertainty at the regional and global levels reinforces the need to accelerate economic transformation and strengthen the ability to confront shocks within the framework of “Oman Vision 2040.”
The priorities, according to the statement, include improving the efficiency of allocating economic resources, reducing the role of the state in areas where the private sector can play a greater role, in addition to developing the labor market, enhancing trade integration, and raising the economy’s ability to confront natural disasters.
The International Monetary Fund mission, headed by Abdullah Al-Hassan, conducted Article 4 consultations for the year 2026 in Muscat during the period from October 25 to November 8, and will prepare a report on the results of the consultations to be presented to the Fund’s Executive Council, after completing the necessary internal procedures.
