Economy of Oman

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Economy of Oman

Currency Omani rial (OMR)

Fixed exchange 1 USD ≈ 0.3845 OMR

rates

Fiscal year Calendar year

Trade organisations WTO and GCC

Country group Developing/Emerging[1]

High-income economy[2]

Statistics

GDP  $379.277 billion (nominal, 2018)[3]

 $200.314 billion (PPP, 2018)[3]

GDP rank 71st (nominal, 2019)

79th (PPP, 2019)

GDP growth 1.8% (2018) 0.5% (2019e)

−3.5% (2020f) 2.7% (2021f)[4]
GDP per capita 48th (nominal, 2018)
rank
58th (PPP, 2018)
GDP by sector agriculture 1.7%
industry 45.2%

services 53% (2017 est.)[5]

Inflation (CPI) 0.900% (2018)[3]
Population NA%
below poverty line
Gini coefficient 30.72 (2010)[6]
Human  0.816 very high (2021)[7] (54th)
Development Index
 0.708 high IHDI (52nd) (2021)[8]
Labour force  2,787,190 (2019)[9]

Unemployment  3.0% (Dec 2017)[10]

Main industries crude oil production and refining, natural and liquefied natural

gas (LNG) production; construction, cement, copper, steel,

 chemicals, optic fiber
Ease-of-doing-  68th (easy, 2020)[11]
business rank

External

Exports  $21.1 billion (2016)[12]

Export goods petroleum, reexports, fish, metals, textiles
Main export  China 31.9%
partners
 Japan 12.9%
 United Arab Emirates 10.1%

 South Korea 10.0%

 Thailand 4.4%

 Singapore 4.4% (2012 est.)[13]

Imports  $20.6 billion (2016)[12]

Import goods machinery and transport equipment, manufactured goods, food,

livestock, lubricants
Main import  United Arab Emirates 23.6%
partners
 Japan 12.6%

 India 8.5%

 China 6.4%
 United States 6.1%

 United Kingdom 5.1%

 Italy 4.8% (2012 est.)[14]

FDI stock  NA[5]

 Abroad: NA[5]
Current account  −$10.76 billion (2017 est.)[5]
Gross external debt  $46.27 billion (31 December 2017 est.)[5]

Public finances
Public debt  88% of the GDP (2019 est.)[5]

Revenues $157.02 billion (2019 est.)[5]

Expenses $163.41 billion (2019 est.)[5]

Credit rating Standard & Poor's:[15]

AAA (T&C Assessment)

Outlook: Stable[16]

Moody's:[16]

Aaa

Outlook:
 Fitch:[16]

AAA-

Outlook: negative
Main data source: CIA World Fact Book
All values, unless otherwise stated, are in US dollars.

The economy of Oman is mainly centered around its oil sector, with fishing and trading
activities located around its coastal regions. When oil was discovered in 1964, the
production and export increased significantly. The government has made plans to
diversify away from oil under its privatization and Omanization policies. [17] This has
helped raise Oman's GDP per capita continuously in the past 50 years. It grew 339% in
the 1960s, reaching a peak growth of 1,370% in the 1970s. Similar to the pricing of all
other commodities, the price of oil is subject to significant fluctuations over time,
especially those associated with the business cycle. A commodity's price will rise
sharply when demand, like that for oil, outpaces supply; meanwhile, when supply
outpaces demand, prices will fall.
It scaled back to a modest 13% growth in the 1980s and rose again to 34% in the
1990s.[18] Oman joined the Gulf Cooperation Council in 1981 with the aim of establishing
a customs union, a common market and a common currency.[19][20]
Petroleum is responsible for 64% of all export revenue, 45% of government income, and
50% of GDP. Given that it accounts for half of the Sultanate of Oman's GDP, the
petroleum products industry is one of the most significant in the Omani economy.

Contents

 1Macro-economic trend
 2Overview
 3Omanisation
o 3.1Training and Omanisation
 4Investment
 5See also
 6References
 7External links
o 7.1Government
o 7.2Other

Macro-economic trend[edit]
This is a chart of trend of the gross domestic product and gross domestic product per
cap das cap of Oman at market prices by the International Monetary Fund.[21]

Year Gross Domestic Product Per Capita Per Capita Income

(in millions US$) Income (as % of USA)
 (US$)

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 the Omani
economy in the past

Oman liberalised its markets in an effort to accede to the World Trade

Organization (WTO) and gained membership in 2000. [22] The Director of the Sultanate of
Oman's delegation to the WTO is Hilda al-Hinai.[23] Further, 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. [22]
The government also undertook some important policy measures during 2018 with the
establishment of a commercial arbitration center, the adoption of a new commercial
companies' law, and a further streamlining of licensing processes through Invest Easy in
order to improve the business and investment climate and promote private sector-led
growth in the Sultanate.
Oman's economy and revenues from petroleum products have enabled Oman's
dramatic development over the past 50 years. Notably however, Oman is not a member
of OPEC, although it has coordinated with the group in recent years. [24]

Petrochemical tanks in Sohar

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. Natural gas reserves, which 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.
Oman's 10th five-year plan (2020–2025) is the first implementation plan of Vision 2040,
[25]
 and will focus its efforts towards achieving economic diversification. [26] The plan for
economic diversification aims to move Oman away from the oil-and-gas-based sources
of income, and has earmarked five sectors that have high growth potential and
economic returns. These are agriculture and fisheries, manufacturing, logistics and
transport, energy and mining, and tourism.
Oil and natural gas consists of a significant part of Oman's economy

According to the Central Bank of Oman's Annual Report 2018,[27] the Omani crude oil

price averaged at US$69.7 a barrel in 2018 as compared to US$51.3 per barrel during
2017. The recovery in oil prices also contributed to growth in non-oil economic activities,
reflecting inter-linkages, although the dependency of non-oil activities on oil activities
has somewhat weakened in the last few years.[28]
According to the World Bank growth is expected to increase over 2020–21, driven in
part by a large increase in gas production from the new Khazzan gas project, and
infrastructure spending plans in both oil and non-oil sectors. [29] Notably,
with Khazzan phase-I becoming operational, the natural gas under the petroleum sector
is also emerging as a significant contributor to the Omani economy, with BP committing
to invest US$16 Billion developing the field. [30] Meanwhile, the Special Economic Zone
Authority of Duqm (SEZAD) attracted $14.2 billion worth of investments in the form of
usufruct agreements signed till the end of 2018. [31] With a land area of 2,000 km2 and
70 km of coastline along the Arabian Sea, the Duqm Special Economic Zone is the
largest in the Middle East and North Africa region and ranks among the largest in the
world. Duqm is an integrated economic development composed of zones: a sea port,
industrial area, new town, fishing harbor, tourist zone, a logistics center and an
education and training zone, all of which are supported by a multimodal transport
system that connects it with nearby regions.[32]
On the fiscal front, government expenditure also increased noticeably in 2018 due to
higher spending on oil & gas production, defence, subsidies and elevated interest
payments. The government debt also increased to RO 14,492 in 2018 – with the debt to
GDP ratio expected increased to 58 percent by 2020, [33] leading to constraints on the
ability of fiscal spending to support growth and raising sustainability concerns.

Omanisation[edit]
The Omanisation programme 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.[34]
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 Omanisation targets in six areas of the private sector. Most
companies have registered Omanisation plans. Since April 1998 a 'green card' has
been awarded to companies that meet their Omanisation 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 Omanisation include Ingo Forstenlechner
from United Arab Emirates University and Paul Knoglinger from the FHWien. [citation needed]
Omanisation, 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.[35] 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.[36]
Training and Omanisation[edit]
In order to meet the training and Omanisation 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 Omanisation 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 Omanised 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%
Omanisation 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 Omanisation
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 capitalisation of listed companies in Oman was valued at $15,269
million in 2005 by the World Bank.[37]

See also[edit]
 Oman portal

 Central Bank of Oman

 Omani Rial
 List of companies of Oman
 US-Oman Free Trade Agreement