Economy of Oman


Economy of Oman
Economy of Oman
Ruwi CBD.jpg
Rank 81st
Currency Riyal Omani
Fiscal year Calendar year
Trade organisations WTO
Statistics
GDP $67.45 billion (2008 est.)
GDP growth 6.2% (2008 est.)
GDP per capita $20,400 (2008 est.)
GDP by sector agriculture 2.1%, industry 37.2%, services 60.7% (2008 est.)
Inflation (CPI) 13.5% (2008 est.)
Labour force 920,000 (2002 est.)
Unemployment 15% (2004 est)
Main industries crude oil production and refining, natural and liquefied natural gas (LNG) production; construction, cement, copper, steel, chemicals, optic fiber
Ease of Doing Business Rank 57th[1]
External
Exports $33.9 billion f.o.b. (2008 est.)
Export goods petroleum, reexports, fish, metals, textiles
Main export partners China 26.8%, South Korea 15.2%, Japan 14.3%, Thailand 10.4%, United Arab Emirates 7.6%, United States 4.3%, Iran 4.1% (2007)
Imports $13.32 billion f.o.b. (2008 est.)
Import goods machinery and transport equipment, manufactured goods, food, livestock,lubricants
Main import partners United Arab Emirates 19.3%, Japan 17.6%, United States 7.4%, Germany 5.2%, India 4.1% (2007)
Public finances
Public debt 2.4% of GDP (2008 est.)
Revenues $18.41 billion (2008 est.)
Expenses $$14.74 billion (2008 est.)
Economic aid donor: pledged $1 million to Darfur refugees (2008)
Credit rating Standard & Poor's:[2]
A (Domestic)
A (Foreign)
AA- (T&C Assessment)
Outlook: Stable[3]
Moody's:[3]
A1
Outlook: Stable
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 half-a-century. It grew 339% in the Sixties reaching a peak growth of 1,370% in the Seventies scaling back to modest 12% growth in the turbulent Eighties and rising again to 34% in the Nineties.

Contents

Macro-economic trend

This is a chart of trend of gross domestic product of Oman at market prices estimated by the International Monetary Fund with figures in millions of Omani Rials.

Year Gross Domestic Product US Dollar Exchange Inflation Index
(2000=100)
Per Capita Income
(as % of USA)
1980 2,190 0.34 Omani Rials 80 43.12
1985 3,591 0.34 Omani Rials 76 39.15
1990 4,493 0.38 Omani Rials 95 30.89
1995 5,307 0.38 Omani Rials 100 23.75
2000 7,639 0.38 Omani Rials 100 23.78
2005 11,660 0.38 Omani Rials 101 29.36

For purchasing power parity comparisons, the US Dollar is exchanged at 0.29 Omani Rials only. Mean wages were $15.99 per manhour in 2009.

Overview

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.

When Oman declined as an entrepot for arms and slaves in the mid-19th century, much of its former prosperity was lost, and the economy turned almost exclusively to agriculture, camel and goat herding, fishing, and traditional handicrafts. Today, 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 tans 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

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 Governate, 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.[4]

Omanization

Introduction

In Oman, the Omanization program has been in operation since 1988, working toward replacing expatriates with trained Omani personnel. 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]

Training and Omanization

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 78.8% of all positions were held by Omanis which is a considerable achievement for the banking sector in general. Women made up 30% of the total. During 1999 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

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

Oman is one of those countries with little or no national debt, but national wealth, managed via a number of sovereign wealth funds. The most significant of those is the State General Reserve Fund, or SGRF.

Statistics

Household income by percentage share:
lowest 10%: NA%
highest 10%: NA%

Industrial production growth rate: 5.9% (2006 est.)

Electricity - production: 14.33 billion kWh (2004)

Electricity - production by source:
fossil fuel: 100%

Electricity - consumption: 13.33 billion kWh (2004)

Electricity - exports: 0 kWh (1998)

Electricity - imports: 0 kWh (1998)

Agriculture - products: dates, limes, bananas, alfalfa, vegetables; camels, cattle; fish

Exchange rates: Omani rials per US dollar - 0.3845 (2005), 0.3845 (2004), 0.3845 (2003), 0.3845 (2002), 0.3845 (2001)

See also

References

External links

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