Economic and Political Overview

flag Oman Oman: Economic and Political Overview

In this page: Economic Indicators | Foreign Trade in Figures | Sources of General Economic Information | Political Outline | COVID-19 Country Response

 

Economic Indicators

The Sultanate of Oman has experienced remarkable economic growth since 2004, primarily driven by the exploitation of its oil reserves. Despite a contraction due to the pandemic, Oman's economic recovery continued in 2022 (+4.3% of GDP), supported by favorable oil prices and sustained reform momentum. In 2023, growth persisted, albeit at a slower pace (+1.2%), reflecting OPEC+-related oil production cuts. GDP growth is projected to slightly expand to 1.4% in 2024, supported by increased gas production, the commencement of operations at the Duqm refinery, and higher non-hydrocarbon growth (2.5%). Over the medium term, non-hydrocarbon growth is expected to gradually increase to 4%, supported by global demand recovery, continued reforms, and robust private investment, particularly in non-hydrocarbon sectors (IMF).

Oman has made significant progress in strengthening its fiscal and external positions while advancing the implementation of Oman Vision 2040. The Medium-Term Fiscal Plan (MTFP), initiated in 2020, has played a crucial role in achieving fiscal sustainability by diversifying revenue streams, controlling expenditures, and prudently managing hydrocarbon windfall savings. The overall fiscal balance achieved a surplus of 5.5% of GDP in 2023, driven by favorable oil prices and sustained fiscal discipline. However, it is projected to decrease to 3.7% of GDP in 2024, mainly due to increased social spending as the new social protection law takes effect. Over the medium term, the overall fiscal balance is expected to remain comfortably in surplus, declining to 3.3% of GDP by 2028 in line with oil price trends. Central government debt, which stood at 37.7% of GDP in 2023, is forecasted to decrease to around 30% of GDP by 2028, supported by favorable debt dynamics and ongoing net repayments. Oman's risk of sovereign debt stress is assessed as low, supported by the availability of liquid financial assets to the government, which helps mitigate solvency and liquidity risks. Inflation decreased to 1.2% in 2023, primarily attributed to lower transport and food inflation rates, and is anticipated to align with a target of 2% over the medium term, consistent with the currency peg to the U.S. dollar.

According to the IMF, employment grew by 16.2% in 2022, primarily driven by the recovery of expatriate employment to pre-pandemic levels. Omani employment grew at a modest 3.6% in 2022. However, recent data indicates a continued increase in expatriate employment but a decrease in Omani employment in the first half of 2023. In response, the government introduced initiatives to address the high share of expatriate workers, including bans on foreign worker visas, to promote the employment of Omani citizens. Additionally, the authorities have implemented a new labor law focused on modernizing regulations and enhancing working conditions and flexibility in the labor market. Several initiatives have been launched to bolster the employment of nationals in the private sector, including the Wage Protection System and providing wage support to private sector employers for hiring nationals.

 
Main Indicators 20222023 (E)2024 (E)2025 (E)2026 (E)
GDP (billions USD) 114.67109.13108.93111.05114.81
GDP (Constant Prices, Annual % Change) 4.31.31.23.13.5
GDP per Capita (USD) 23,44721,62320,91320,66020,697
General Government Gross Debt (in % of GDP) 39.836.435.433.531.6
Inflation Rate (%) 2.50.91.31.52.0
Current Account (billions USD) 5.651.952.962.342.24
Current Account (in % of GDP) 4.91.82.72.12.0

Source: IMF – World Economic Outlook Database , Latest available data

Note: (e) Estimated Data

Main Sectors of Industry

Oman has a workforce of 2.26 million out of its 4.69 million population, of whom about 43% are expatriates. The share of expatriate workers has declined in recent years as Oman implemented a visa ban to boost hiring of Omani citizens. Prior to the discovery of oil fields, Oman was virtually a subsistence economy that was entirely based on agriculture and fisheries. Nowadays, the latter contributes only marginally to GDP (1.8%) and employs 6% of the workforce (World Bank, latest data available). Agricultural production is mainly composed of dates, limes, bananas, and owing to the lack of fertile land the country needs to import from international markets. In the agricultural season of 2022/2023, wheat production in the Sultanate of Oman saw a remarkable surge of 229%, totaling 7,119 tonnes. Additionally, the number of farmers increased by 24%, and the area dedicated to wheat cultivation expanded by 160% year-on-year, according to data from the Ministry of Agriculture.

The industrial sector accounts for 57% of GDP and employs 47% of the workforce (World Bank). Its share has increased considerably in the last two decades (employment in industries was as low as 11% in 2000) as Oman increasingly uses enhanced oil recovery techniques and supports mining and manufacturing. The manufacturing sector alone is estimated to contribute to 10% of GDP (World Bank). However, the country is heavily dependent on oil and gas resources, which generate between 70% and 85% of government revenue on average, depending on fluctuations in commodity prices.

The services sector accounts for 44.5% of GDP and 47% of the workforce (down from 82.4% in 2000). Oil-related activities comprise a significant share of the services sector; however, logistics (maritime transport in particular) and financial activities are growing steadily. Tourism is one of the sectors being developed in order for the Sultanate to build a sustainable non-oil future, and the number of tourists has more than doubled in the last decade (3.5 million in 2019, according to the National Centre for Statistics and Information) and just over 3 million in 2023. Banking activity in the region is predominantly controlled by six domestic banks and two Islamic banks. Additionally, there are nine foreign banks, although they typically operate only one branch each. The sector exhibits moderate concentration, with the largest bank, currently the sole domestically systemically important bank (DSIB), holding approximately 40% of total banking assets, as reported by the IMF.

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 4.1 48.3 47.6
Value Added (in % of GDP) 1.8 57.0 44.5
Value Added (Annual % Change) -9.7 5.1 4.2

Source: World Bank - Latest available data.

 

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Monetary Indicators 20162017201820192020
Omani Rial (OMR) - Average Annual Exchange Rate For 1 MUR 0.010.010.010.010.01

Source: World Bank - Latest available data.

 
 

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Indicator of Economic Freedom

Definition:

The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.

Score:
64,6/100
World Rank:
71
Regional Rank:
7

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation

 
 

Country Risk

See the country risk analysis provided by Coface.

 

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Foreign Trade in Figures

Oman's economy is highly open, with trade constituting approximately 94% of the country’s GDP, according to the World Bank. The Sultanate primarily exports hydrocarbons and petrochemicals but has been striving to diversify its economy in recent years, with an increasing share of industrial products in total exports. Oman's economy heavily relies on exports of oil (50.6% of total exports) and liquefied natural gas (9.9%), with other exports including chemicals, plastics, and rubber products. In contrast, the main imports consist of petroleum oils, iron ores, vehicles, telephones, and gold.

The United Arab Emirates, Saudi Arabia, the United States, India, and China are Oman’s main export partners, while imports primarily originate from the United Arab Emirates, China, India, Qatar, and Brazil. Oman benefits from high-quality port facilities that facilitate trade; however, slow procedures and rigid labor laws remain significant obstacles. Customs duties are relatively low, and there are few trade barriers in the country, with goods produced in Gulf Cooperation Council (GCC) member countries being duty-free if accompanied by a certificate of origin.

According to WTO data, Oman's goods exports totaled USD 66.4 billion in 2022, marking a 49% increase from the previous year due to higher hydrocarbon prices, while imports amounted to USD 38.7 billion, up by 24%. The country maintains a structural trade surplus, although it is highly sensitive to fluctuations in hydrocarbon prices. However, non-oil exports experienced a 2.8% year-on-year decrease during the first 10 months of 2023, primarily attributed to reduced shipments to the United States. The total value of non-oil exports decreased to OMR 6.122 billion during the January–October period of 2023 compared to OMR 6.297 billion recorded in the same period the previous year. Additionally, by the end of December 2023, Oman's total oil exports amounted to 310,331,200 barrels, with an average price per oil barrel of USD 82.3, according to data issued by the National Centre for Statistics and Information (NCSI).

 
Foreign Trade Indicators 20192020202120222023
Imports of Goods (million USD) 23,50728,50730,99538,57336,382
Exports of Goods (million USD) 38,72433,47944,59166,06362,736
Imports of Services (million USD) 12,1128,1778,45310,607n/a
Exports of Services (million USD) 4,8982,2371,7332,787n/a
Imports of Goods and Services (Annual % Change) -3.4-8.92.7n/an/a
Exports of Goods and Services (Annual % Change) 1.9-14.614.2n/an/a
Imports of Goods and Services (in % of GDP) 37.044.841.4n/an/a
Exports of Goods and Services (in % of GDP) 49.547.152.5n/an/a
Trade Balance (million USD) 18,2297,63816,542n/an/a
Trade Balance (Including Service) (million USD) 11,0151,6979,822n/an/a
Foreign Trade (in % of GDP) 86.591.993.9n/an/a

Source: WTO – World Trade Organisation ; World Bank , Latest Available Data

 

Main Partner Countries

Main Customers
(% of Exports)
2022
United Arab Emirates 4.8%
Saudi Arabia 3.6%
United States 3.4%
India 3.4%
Qatar 1.5%
See More Countries 83.2%
Main Suppliers
(% of Imports)
2022
United Arab Emirates 29.0%
Saudi Arabia 12.0%
India 8.5%
China 7.5%
Qatar 6.2%
See More Countries 36.9%

Source: Comtrade, Latest Available Data

 
 

Main Products

66.1 bn USD of products exported in 2022
Petroleum oils and oils obtained from bituminous...Petroleum oils and oils obtained from bituminous minerals, crude 45.9%
Petroleum gas and other gaseous hydrocarbonsPetroleum gas and other gaseous hydrocarbons 12.3%
Petroleum oils and oils obtained from bituminous...Petroleum oils and oils obtained from bituminous minerals (excl. crude); preparations containing >= 70% by weight of petroleum oils or of oils obtained from bituminous minerals, these oils being the basic constituents of the preparations, n.e.s.; waste oils containing mainly petroleum or bituminous minerals 12.0%
Iron ores and concentrates, incl. roasted iron...Iron ores and concentrates, incl. roasted iron pyrites 3.3%
Mineral or chemical nitrogenous fertilisers (excl....Mineral or chemical nitrogenous fertilisers (excl. those in pellet or similar forms, or in packages with a gross weight of <= 10 kg) 3.2%
See More Products 23.4%
38.6 bn USD of products imported in 2022
Petroleum oils and oils obtained from bituminous...Petroleum oils and oils obtained from bituminous minerals (excl. crude); preparations containing >= 70% by weight of petroleum oils or of oils obtained from bituminous minerals, these oils being the basic constituents of the preparations, n.e.s.; waste oils containing mainly petroleum or bituminous minerals 22.3%
Motor cars and other motor vehicles principally...Motor cars and other motor vehicles principally designed for the transport of persons, incl. station wagons and racing cars (excl. motor vehicles of heading 8702) 4.8%
Iron ores and concentrates, incl. roasted iron...Iron ores and concentrates, incl. roasted iron pyrites 4.0%
Telephone sets, incl. telephones for cellular...Telephone sets, incl. telephones for cellular networks or for other wireless networks; other apparatus for the transmission or reception of voice, images or other data, incl. apparatus for communication in a wired or wireless network [such as a local or wide area network]; parts thereof (excl. than transmission or reception apparatus of heading 8443, 8525, 8527 or 8528) 1.9%
Gold, incl. gold plated with platinum, unwrought...Gold, incl. gold plated with platinum, unwrought or not further worked than semi-manufactured or in powder form 1.9%
See More Products 65.1%

Source: Comtrade, Latest Available Data

 
 

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Main Services

Source: United Nations Statistics Division, Latest Available Data

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Sources of General Economic Information

Ministries
Ministry of Energy and Minerals
Statistical Office
National Centre for Statistics and Information
Central Bank
Central Bank of Oman
Stock Exchange
Muscat Stock Exchange
Search Engines
Business Directory Oman
Google Oman
Sabla Oman
Economic Portals
Zawya News
Oman Economic Review
Muscat Daily Business News

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Political Outline

Current Political Leaders
Sultan: Haitham bin Tariq al Said (since 11 January 2020)
Next Election Dates
Consultative Assembly: October 2027
Main Political Parties
Oman does not allow political parties. The only political organisation, Popular Front for the Liberation of Oman, was dissolved in 1992, and remains dormant to this day.
Type of State
Absolute Monarchy (Sultanate)
Executive Power
Oman is an absolute monarchy and the Sultan is both head of state and head of government. The hereditary Sultan appoints a cabinet to assist him and serves as the supreme commander of the armed forces, prime minister, and minister of defence, foreign affairs, and finance. The Sultan does not designate his successor when alive. Instead, the ruling family designates a new ruler after the Sultan's death.
Legislative Power
The legislative branch is bicameral; however, it does not have full power over the law-making process. Also known as Majlis Oman, it comprises two chambers: the Council of State, or Majlis al-Dawla, consisting of 87 seats including the chairman, with members appointed by the sultan from among former government officials, prominent educators, businessmen, and citizens, serving four-year terms; and the Consultative Assembly, or Majlis al-Shura, with 90 seats, where members are directly elected in single- and two-seat constituencies by simple majority popular vote, serving renewable four-year terms.
 

Indicator of Freedom of the Press

Definition:

The world rankings, published annually, measures violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire incorporating the main criteria (44 in total) to assess the situation of press freedom in a given country. This questionnaire was sent to partner organisations,150 RWB correspondents, journalists, researchers, jurists and human rights activists. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).

World Rank:
133/180
 

Indicator of Political Freedom

Definition:

The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.

Ranking:
Not Free
Political Freedom:
6/7

Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House

 

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COVID-19 Country Response

Travel restrictions
Regularly updated travel information for all countries with regards to Covid-19 related entry regulations, flight bans, test and vaccines requirements is available on TravelDoc Infopage.
To find information about the current travel regulations, including health requirements, it is also advised to consult Travel Regulations Map provided and updated on a daily basis by IATA.
Import & export restrictions
A general overview of trade restrictions which were adopted by different countries during the COVID-19 pandemic is available on the International Trade Centre's COVID-19 Temporary Trade Measures webpage.
Economic recovery plan
For the general overview of the key economic policy responses to the COVID-19 pandemic (fiscal, monetary and macroeconomic) undertaken by the government of Oman, please consult the country's dedicated section in the IMF’s Policy Tracker platform.
Support plan for businesses
For an evaluation of impact of the Covid pandemic on SMEs and an inventory of country responses to foster SME resilience, refer to the OECD's SME Covid-19 Policy Responses document.
You can also consult the World Bank's Map of SME-Support Measures in Response to COVID-19.

 

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Latest Update: May 2024