Economy, Income, And Trade of in Oman
Oman's location at the entrance to the Persian Gulf for centuries made it an entrepôt for trade, including a substantial traffic in arms and slaves. Its prosperity declined in the 19th century, when, as a result of Western dominance in Asia, traditional trade patterns and communications routes were radically changed. Oman's economy then became predominantly dependent on agriculture and fishing.
The situation changed with the discovery of oil in 1964. Production began in August 1967, and by the mid-1970s most of the economy revolved around oil. The hydrocarbons sector accounted for 77% of export earnings and government revenues in 2000. Despite diversification efforts, petroleum's share of GDP rose from 37% in 1994 to 38.2% in 1995 to 40% in 1999. In 2000, petroleum's share jumped to 49% of GDP as oil prices rose sharply from near-record lows in early 1999. As of January 2001, Oman's proven oil reserves were 5.5 billion barrels. At the estimated high production level of 959,816 barrels per day in 2001, the reserves would last another 15.7 years. The government's Oman 2020 program looks to a fundamental transformation of the economy by that time. The production of natural gas has become a significant factor of the economy. Gas reserves increased from 9.8 trillion cubic feet in 1990 to 29.3 trillion cubic feet 2001, and government predictions are that this will eventually expanded to some 40 trillion cubic feet in 1999 and are further increasing. Two major extensions of Oman's pipeline connections from gas deposits in the center of the country were completed in August 2002: a pipeline to the north coast at Sohar and a pipeline to the south coast at Salalah. With the recovery of gas prices from in the latter half of 1999, GDP grew at extraordinarily high rates of 15.6% in 1999 and 19.6% in 2000. Inflation was negligible at 0.4% in 1999 and 1.4% in 2000.
In 2004, the GDP growth rate was 0.7%, down from 2.3% in 2003, and 1.9% in 2002; in 2005, the economy expanded by an estimated 1.6%. The inflation rate has been fairly stable, and at 0.3% in 2004 it did not pose any problems to the economy, although it was not ideal for the export sector. The unemployment rate was tagged at 15%, but only a certain layer of society is affected by it. To respond to this problem, the government is trying to replace foreign expatriate workers with local workers. In 2005 work on a new liquefied gas facility progressed, but plans are made to diversify the economy for the days when Oman's natural resources will be exhausted.
The US Central Intelligence Agency (CIA) reports that in 2005 Oman's gross domestic product (GDP) was estimated at $40.1 billion. The CIA defines GDP as the value of all final goods and services produced within a nation in a given year and computed on the basis of purchasing power parity (PPP) rather than value as measured on the basis of the rate of exchange based on current dollars. The per capita GDP was estimated at $13,400. The annual growth rate of GDP was estimated at 1.9%. The average inflation rate in 2005 was 0.4%. It was estimated that agriculture accounted for 2.8% of GDP, industry 40%, and services 57.1%.
According to the World Bank, in 2003 remittances from citizens working abroad totaled $39 million or about $15 per capita and accounted for approximately 0.2% of GDP. Foreign aid receipts amounted to $45 million or about $17 per capita.
The World Bank reports that in 2003 household consumption in Oman totaled $8.75 billion or about $3,368 per capita based on a GDP of $21.7 billion, measured in current dollars rather than PPP. Household consumption includes expenditures of individuals, households, and nongovernmental organizations on goods and services, excluding purchases of dwellings.
In 2001 it was estimated that approximately 22% of household consumption was spent on food, 25% on fuel, 13% on health care, and 21% on education.
Though oil is the strongest basis for the Omani economy, agriculture and fishing are still very much a part of the traditional lifestyle. Most of the government's development plans are aimed at industry to support greater foreign trade, rather than to provide consumer products for the domestic market. Muscat and Matrah are the primary commercial centers. Much of the business is carried on by long-established and settled Khoja and Hindu merchants, but supermarkets and other larger retail establishments are beginning to take root.
Normal business hours are 8:30 am to 1:30 pm and 4 to 7 pm, Saturday–Wednesday; banking hours are generally 8 am to noon, though some banks reopen from 4 to 6 pm. Banks and businesses close at 11:30 am on Thursday and remain closed Friday. Business hours are reduced during the Ramadan fast.
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Oman runs a considerable trade surplus. Since 1967, oil has been the chief export. In 2000 Oman's major export commodities were crude petroleum (80%) and motor vehicles and parts (3.4%). Other exports included tobacco (1.2%) and apparel (1.1%). In 2000 Oman's imports were distributed among the following categories: consumer goods, 18.2%; food, 13.2%; fuels, 1.7%; industrial supplies, 20.2%; machinery, 18.4%; transportation, 25.7%; and other, 2.6%.
In 2005, exports reached $19 billion (FOB—Free on Board), while imports grew to $9 billion (FOB). The bulk of exports went to China (29.5%), South Korea (17.5%), Japan (11.5%), Thailand (10.6%), and the UAE (7.2%). Imports included machinery and transport equipment, manufactured goods, food and live animals, and mainly came from the UAE (21.2%), Japan (16.6%), the United Kingdom (8.4%), Italy (6%), Germany (5.1%), and the United States (4.7%).