Area: 309,500 sq. km
Population: 3,840,000 (2014, est.)
GDP: USD 77.8bn (2014, est.)
Exports: USD 58.74bn (2014, est.)
Imports: USD 34.37bn (2014, est.)
Currency: Rial Omani (OMR)
Exchange rate: 1 USD = 0.38 OMR (01/2016)
Economic Structure and Development:
The economy of Oman differs only partially from those of its neighbours, as the Sultanate’s revenues are also mostly generated through oil and gas exports. With crude oil reserves or 5.5bn barrels and proven gas reserves of 849.5 cubic-meters, the country is only a moderate amount of natural resources compared to direct neighbours such as Saudi Arabia or Qatar. Moreover, the production of all and gas from onshore fields is more expensive due to Oman’s rocky geology, requiring more expenditure but remaining cost efficient. To counter this problem, domain government has invested more than USD 10bn since 2004 in order to modernise existing facilities to absorb oil production losses and to increase its oil production. Nevertheless, the country has seen a huge transition in terms of revenues and GDP growth in recent decades.
Due to the high oil prices in the recent years (even during the global recession in 2009) and in spite of all the efforts to diversify the industrial base of the sultanate, oil and gas still contribute more than 40% to GDP and constitute roughly 70% of all exports. The GDP has experienced constant but mediocre growth. In 2012, GDP increase by 5% according to estimates for 2013 and 2014, GDP will increase by 5.1% and 3.4% respectively. The government budget balance has been positive in recent years, at an estimated 6.4% of the GDP in 2013 and 3.8% in 2014. Government debt has seen nearly no change. Since 2012 it has increased very slightly from 4.3% to 4.4% and will not change in 2014 according to estimations.
Like its neighbouring countries, Oman has realised the need for economic diversification, industrialisation and privatisation to reach the goal off reducing the oil sector’s GDP contribution to 9% by 2020. To achieve these goals, the country is trying to focus on the promotion of its gas and tourism sectors. On going high oil prices and increasing production have allowed sultanate to foster social subsidies, establish a welfare system and create jobs in the public sector. The public sector job creation program, also known as “Omanization”, is an especially big challenge for the country because the local workforce is often not qualified or motivated for such jobs. Additionally, Oman’s budget is at its cap and local workers are a lot more expensive than foreign workforce, as they not only get more income but also welfare benefits. On these grounds, Oman has to further develop and support the private sector, in particular small and medium-sized (SME) companies as well as support private entrepreneurship.
For the middle-term future, one can forecast a constant GDP growth for the sort and they due to its ordering gas revenues. Consequently, there are and will be more infrastructural investments in sea and airports, in the oil and gas industry, as well as further urban development. Imports will continue to play a vital role to Oman’s economy, however, the Sultanate will stay relatively insignificant market in the short-term. Sector wise, there will be an unbroken, increasing potential and demand for high-quality technology and know-how in electronics, ICT, and environmental engineering, medical technology, transport infrastructure and tourism.
The Sultanate will have two further trusts in its strengths, such as it’s moderate oil and gas resources, its financial reserves, it’s still prospering economy and its strategic sea and airports. But the country is also hide dependent on the strengths. Its market is relatively small and relies on foreign labour force, Technology and know-how. The diversification of the Omani economy must also be further promoted. Opportunities to do so can be seen in the development of the tourism sector, additional political reforms and rapid implementation and further development of the countries various large-scale infrastructure projects. Economic development will be dependent on regional as well as domestic political developments.
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