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Economy of Oman

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Economy of Oman
Ruwi CBD.jpg
CurrencyOmani rial (OMR)
1 USD ≈ 0.3845 OMR
Calendar year
Trade organisations
WTO
Country group
Statistics
GDP rank64th (nominal) / 74th (PPP)
GDP growth
  • −0.9% (2017) 2.2% (2018e)
  • 0.3% (2019f) 3.5% (2020f)[3]
GDP per capita
Decrease $15,668 (2017)[4]
GDP by sector
agriculture 1.7%
industry 45.2%
services 53% (2017 est.)[5]
Negative increase 3.2% (2017 est.)[5]
Population below poverty line
NA%
30.72 (2010)[6]
Labour force
Increase 2.54 million (2016)[7]
UnemploymentNegative increase 16.9% (Dec 2017)[8]
Main industries
crude oil production and refining, natural and liquefied natural gas (LNG) production; construction, cement, copper, steel, chemicals, optic fiber
Decrease 78th (2019)[9]
External
ExportsDecrease $21.1 billion (2016)[10]
Export goods
petroleum, reexports, fish, metals, textiles
Main export partners
 China 31.9%
 Japan 12.9%
 United Arab Emirates 10.1%
 South Korea 10.0%
 Thailand 4.4%
 Singapore 4.4% (2012 est.)[11]
ImportsPositive decrease $20.6 billion (2016)[10]
Import goods
machinery and transport equipment, manufactured goods, food, livestock, lubricants
Main import partners
 United Arab Emirates 23.6%
 Japan 12.6%
 India 8.5%
 China 6.4%
 United States 6.1%
 United Kingdom 5.1%
 Italy 4.8% (2012 est.)[12]
Public finances
Negative increase 41.3% of GDP (2017 est.)[5]
Negative increase 31.4% of GDP (2016 est.)[5]
Revenues$22.68 billion (2017 est.)[5]
Expenses$32.07 billion (2017 est.)[5]
Economic aiddonor: pledged $1 million to Darfur refugees (2008)
Standard & Poor's: D Junk [13]
Outlook: D Junk[14]
Moody's[15]Outlook: D Junk

All values, unless otherwise stated, are in US dollars.

Oman is a country in the Middle East. Current GDP per capita has expanded continuously in the past 50 years. It grew 339% in the 1960s reaching a peak growth of 1,370% in the 1970s scaling back to modest 13% growth in the 1980s and rising again to 34% in the 1990s.[16]

Macro-economic trend[edit]

This is a chart of trend of the gross domestic product and gross domestic product per capita of Oman at market prices by the International Monetary Fund.[17]

Year Gross Domestic Product
(in millions US$)
Per Capita Income
(US$)
Per Capita Income
(as % of USA)
1980 6,342 4,674 38.16
1985 10,395 6,129 34.65
1990 11,686 6,341 27.33
1995 13,803 6,355 22.84
2000 19,450 8,097 22.97
2005 30,905 11,806 27.70
2010 58,814 23,351 49.88
2015 81,550 24,024 43.03

Overview[edit]

Traditional souqs (this one at Muttrah) are very common in Oman and have formed the bulk of Omani economy in the past

Oman's economic performance improved significantly in 1999 due largely to the mid-year upturn in oil prices. The government is moving ahead with privatization of its utilities, the development of a body of commercial law to facilitate foreign investment, and increased budgetary outlays. Oman liberalized its markets in an effort to accede to the World Trade Organization (WTO) and gained membership in 2000.

Today, petroleum (oil) fuels the economy and revenues from petroleum products have enabled Oman's dramatic development over the past 30 years.

Omani exports in 2006

Oil was first discovered in the interior near Fahud in the western desert in 1964. Petroleum Development Oman (PDO) began production in August 1967. The Omani Government owns 60% of PDO, and foreign interests own 40% (Royal Dutch Shell owns 34%; the remaining 6% is owned by Compagnie Francaise des Petroles [Total] and Partex). In 1976, Oman's oil production rose to 366,000 barrels (58,000 m³) per day but declined gradually to about 285,000 barrels (45,000 m³) per day in late 1980 due to the depletion of recoverable reserves. From 1981 to 1986, Oman compensated for declining oil prices, by increasing production levels to 600,000 b/d. With the collapse of oil prices in 1986, however, revenues dropped dramatically. Production was cut back temporarily in coordination with the Organization of Petroleum Exporting Countries (OPEC), and production levels again reached 600,000 b/d by mid-1987, which helped increase revenues. By mid-2000, production had climbed to more than 900,000 b/d where they remain. Oman is not a member of OPEC.

Natural gas reserves, which will increasingly provide the fuel for power generation and desalination, stand at 18 trillion ft³ (510 km³). The Oman LNG processing plant located in Sur was opened in 2000, with production capacity of 6.6 million tons/YR, as well as unsubstantial gas liquids, including condensates.

Petrochemical tanks in Sohar

Oman does not have the immense oil resources of some of its neighbors. Nevertheless, in recent years, it has found more oil than it has produced, and total proven reserves rose to more than 5 billion barrels (0.8 km³) by the mid-1990s. Oman's complex geology makes exploration and production an expensive challenge. Recent improvements in technology, however, have enhanced recovery.

Agriculture and fishing are the traditional way of life in Oman. Dates and limes, grown extensively in the Batinah coastal plain and the highlands, make up most of the country's agricultural exports. Coconut palms, wheat, and bananas also are grown, and cattle are raised in Dhofar. Other areas grow cereals and forage crops. Poultry production is steadily rising. Fish and shellfish exports totaled $34 million in 2000.

Modernization[edit]

Sohar port is bound to help Oman transform its economy significantly

The government is undertaking many development projects to modernize the economy, improve the standard of living, and become a more active player in the global marketplace. Oman became a member of the World Trade Organization in October 2000, and continues to amend its financial and commercial practices to conform to international standards. Increases in agriculture and especially fish production are believed possible with the application of modern technology. The Muscat capital area has both an international airport at Seeb and a deepwater port at Mina Qaboos. The newly opened (1999), large-scale modern container port at Salalah, capital of the Dhofar Governorate, and a seaport at nearby Raysut were recently completed. A national road network includes a $400 million highway linking the northern and southern regions. In an effort to diversify the economy, in the early 1980s, the government built a $200-million copper mining and refining plant at Sohar. Other large industrial projects include an 80,000 b/d oil refinery and two cement factories. An industrial zone at Rusayl showcases the country's modest light industries. Marble, limestone, and gypsum may prove commercially viable in the future.

The Omani Government is implementing its sixth 5-year plan, launched in 2000, to reduce its dependence on oil and expatriate labor. The plan focuses on income diversification, job creation for Omanis in the private sector, and development of Oman's interior. Government programs offer soft loans and propose the building of new industrial estates in population centers outside the capital area. The government is giving greater emphasis to "Omanization" of the labor force, particularly in banking, hotels, and municipally sponsored shops benefiting from government subsidies. Currently, efforts are underway to liberalize investment opportunities in order to attract foreign capital.

Some of the largest budgetary outlays are in the areas of health services and basic education. The number of schools, hospitals, and clinics has risen exponentially since the accession of Sultan Qaboos in 1970.

United States firms faced a small and highly competitive market dominated by trade with Japan and Britain and re-exports from the United Arab Emirates. The sale of U.S. products has also been hampered by higher transportation costs and the lack of familiarity with Oman on the part of U.S. exporters. However, the traditional U.S. market in Oman, oil field supplies and services, should grow as the country's major oil producer continues a major expansion of fields and wells. In addition, on 20 July 2006 the U.S. Congress approved the US-Oman Free Trade Agreement. This took effect on 1 January 2009, eliminating tariff barriers on all consumer and industrial products. It also provides strong protections for foreign businesses investing in Oman.[18]

Omanization[edit]

Introduction[edit]

In Oman, the Omanization program has been in operation since 1999, working toward replacing expatriates with trained Omani personnel. The goal of this initiative is to provide jobs for the rapidly growing Omani population. The state has allotted subsidies for companies to hire local employees not only to gradually reduce reliance on foreign workers but also to overcome an overwhelming employment preference on the part of Omanis for government jobs.[19]

By the end of 1999, the number of Omanis in government services exceeded the set target of 72%, and in most departments reached 86% of employees. The Ministry has also stipulated fixed Omanization targets in six areas of the private sector. Most companies have registered Omanization plans. Since April 1998 a 'green card' has been awarded to companies that meet their Omanization targets and comply with the eligibility criteria for labour relations. The names of these companies are published in the local press and they receive preferential treatment in their dealings with the Ministry. Academics working on various aspects of Omanization include Ingo Forstenlechner from United Arab Emirates University and Paul Knoglinger from the FHWien.[citation needed]

Omanization, however, in the private sector is not always successful. One of the reasons is that jobs are still filled by expatriates because of the lower wages. Studies reveal that an increasing number of the job openings in the private sector pay the official minimum salary for nationals, which is an unattractive employment prospect for the locals.[20] There is also the problem of placing Omani workers in senior positions due to the fact that a significant chunk of the workforce is composed of young and inexperienced workers.[21]

Training and Omanization[edit]

In order to meet the training and Omanization requirements of the banking sector, the Omani Institute of Bankers was established in 1983 and has since played a leading role in increasing the number of Omanis working in the sector. The Central Bank monitors the progress made by the commercial banks with Omanization and in July 1995 issued a circular stipulating that by the year 2000, at least 75% of senior and middle management positions should be held by Omanis. In the clerical grades 95% of staff should be Omanized and 100% in all other grades. At the end of 1999, no less than 98.8% of all positions were held by Omanis. Women made up 60% of the total. During 2001 the percentage of Omanis employed at senior and middle management levels went up from 76.7% to 78.8%. There was a slight increase in the clerical grade percentage to 98.7%, while the non-clerical grades had already reached 100% Omanization in 1998. The banking sector currently employs 2,113 senior and middle managers supported by 4,757 other staff.[citation needed]

The Ministry has issued a decision regulating tourist guides, who in future will be required to have a license. This Ministerial decision aims at encouraging professionalism in the industry as well as providing career opportunities for Omanis who will be encouraged to learn foreign languages so as to replace foreign tour guides. In January 1996, a major step forward in the training of Omanis in the hotel industry came with the opening of the National Hospitality Institute (NHI). The Institute is a public company quoted on the Omani Stock exchange. In February 1997, the first batch of 55 male and female trainees, sponsored by the Vocational Training Authority, were awarded their first level certificates and were given on-the-job training in several hotels. In May 1999, the fourth batch of 95 trainees obtained their NVQs, bringing the number of Omanis trained by the Institute to around 450. Omanis now make up 37% of the 34,549 employees in the hotel and catering business, which exceeds the Omanization target of 30% set by the Government. The NHI has also trained catering staff from the Sultan’s Armed Forces and has launched a two-year tour guide course, which includes language training, safe driving, first aid and a knowledge of local history and geography.[citation needed]

Investment[edit]

The stock market capitalization of listed companies in Oman was valued at $15,269 million in 2005 by the World Bank.[1]

See also[edit]

References[edit]

  1. ^ "World Economic Outlook Database, April 2019". IMF.org. International Monetary Fund. Retrieved 29 September 2019.
  2. ^ "World Bank Country and Lending Groups". datahelpdesk.worldbank.org. World Bank. Retrieved 29 September 2019.
  3. ^ "Middle East and North Africa Economic Update, October 2019 : Reaching New Heights - Promoting Fair Competition in the Middle East and North Africa p. 5" (PDF). openknowledge.worldbank.org. World Bank. Retrieved 13 October 2019.
  4. ^ "GDP per capita World Bank - Oman". World Bank. Retrieved 25 March 2019.
  5. ^ a b c d e f "The World Factbook- Oman". Central Intelligence Agency. Retrieved 20 May 2018.
  6. ^ "Urban - Gini index - Omani - Total". The National Center for Statistics and Information, Sultanate of Oman. Retrieved 20 May 2018.
  7. ^ "Labor force, total - Oman". The World Bank Group. Retrieved 20 May 2018.
  8. ^ "View Oman's Unemployment Rate from 1991 to 2017 in the chart". CEIC. Retrieved 20 May 2018.
  9. ^ "Ease of Doing Business in Oman". Doingbusiness.org. Retrieved 24 November 2017.
  10. ^ a b "Oman". The Observatory of Economic Complexity. Retrieved 20 May 2018.
  11. ^ "Export Partners of Oman". CIA World Factbook. 2012. Retrieved 23 July 2013.
  12. ^ "Import Partners of Oman". CIA World Factbook. 2012. Retrieved 23 July 2013.
  13. ^ https://www.forbes.com/sites/dominicdudley/2019/03/08/oman-sinks-further-into-junk-bond-territory-with-no-turnaround-in-sight/#6e03eead1da0%7C
  14. ^ https://www.forbes.com/sites/dominicdudley/2019/03/08/oman-sinks-further-into-junk-bond-territory-with-no-turnaround-in-sight/#6e03eead1da0
  15. ^ https://www.forbes.com/sites/dominicdudley/2019/03/08/oman-sinks-further-into-junk-bond-territory-with-no-turnaround-in-sight/#6e03eead1da0
  16. ^ Oman Energy Policy, Laws and Regulations Handbook Volume 1 ISBN 978-1-329-07676-1 p. 113
  17. ^ "Report for Selected Countries and Subjects". Retrieved 8 May 2018.
  18. ^ Chemical & Engineering News, 5 January 2009, "U.S.-Oman pact expands Free Trade", p. 18
  19. ^ Ayalon, Ami (1993). Middle East Contemporary Survey, Volume Xv: 1991. Boulder: Westview Press. pp. 602–603. ISBN 0813318696.
  20. ^ Schlumberger, Oliver (2007). Middle East Contemporary Survey, Volume Xv: 1991. Stanford, CA: Stanford University Press. p. 157. ISBN 9780804757768.
  21. ^ Ayalon, p. 603.

External links[edit]

Government[edit]

Other[edit]