The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Oman, Economy of

  • Barry Turner
Reference work entry
DOI: https://doi.org/10.1057/978-1-349-95189-5_2878

Abstract

Oil and natural gas (excluding petroleum products) contributed 41.0% to GDP in 2009; followed by manufacturing (including petroleum products) 10.3%; trade, restaurants and hotels, 10.2%; and finance and real estate, 9.9%.

Keywords

Baiza Gas reserves Rial Omani 

Overview

Oil and natural gas (excluding petroleum products) contributed 41.0% to GDP in 2009; followed by manufacturing (including petroleum products) 10.3%; trade, restaurants and hotels, 10.2%; and finance and real estate, 9.9%.

Crude oil dominates the economy, accounting for 37% of exports in 2009, with China, Japan and India taking 32%, 17% and 11% respectively. Government attempts to diversify the economy have focused on tourism, shipping and investment in infrastructure. There are also plans to increase natural gas production as a share of gross domestic product to 10% by 2020. Oman holds 0.5% of the world’s liquefied natural gas supply.

Growth from 2005 to 2009 averaged 7.1%, supported by high oil prices and accelerated growth in non-hydrocarbon sectors including trade, transport and communications. Higher global commodity prices, domestic demand growth (prompted by fiscal stimuli) and strong private sector credit growth raised inflation to over 12% in 2008 although it has fallen since then.

Public debt was 5.6% of GDP in 2012, while unemployment stood at 15%. The government’s eighth Five Year Plan (for 2011 until 2015) aims for GDP growth at a minimum of 3% per year, with RO 12 bn. earmarked for investment in the natural gas sector. It is hoped that development of gas-based and non-hydrocarbon industries will reduce unemployment.

Currency

The unit of currency is the Rial Omani (OMR). It is divided into 1,000 baiza. The rial is pegged to the US dollar. In July 2005 foreign exchange reserves were US$4,511m. and gold reserves totalled 1,000 troy oz (291,000 troy oz in April 2002). Total money supply was RO 1,067 m. in May 2005. Inflation was 12.6% in 2008, 3.5% in 2009, 3.3% in 2010 and 4.0% in 2011.

In 2001 the six Gulf Arab states—Oman, along with Bahrain, Kuwait, Qatar, Saudi Arabia and the United Arab Emirates—signed an agreement to establish a single currency by 2010. However, Oman withdrew from the scheme in 2007.

Budget

In 2008 revenues were RO 7,829.4 m. and expenditures RO 7,556.7 m. Oil revenue accounted for 67.5% of revenues in 2008; current expenditure accounted for 58.5% of expenditures.

Performance

Real GDP growth was 3.9% in 2009, 5.0% in 2010 and 5.4% in 2011. Total GDP in 2011 was US$70.0 bn.

Banking and Finance

The bank of issue is the Central Bank of Oman, which commenced operations in 1975 (President, Hamood Sangour Al Zadjali). All banks must comply with BIS capital adequacy ratios and have a minimum capital of RO 20 m. (minimum capital requirement for foreign banks established in Oman is RO 3 m.). In 2002 there were 15 commercial banks (of which nine were foreign) and three specialized banks. The largest bank is BankMuscat SAOG, with assets of RO 1.3 bn.

Total foreign debt was US$3,472 m. in 2005.

There is a stock exchange in Muscat, which is linked with those in Bahrain and Kuwait.

See Also

Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Barry Turner
    • 1
  1. 1.