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Oman Economy


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.

Prior to the discovery and exploitation of oil and natural gas in Oman in the mid-1960’s, its economy used to consist mostly of fishing, agriculture and traditional crafts such as boat-making. However, Oman's economy today maintains a largely traditional sector based on agriculture and the country had also managed to develop a modern economic sector based on oil.

Production began in August 1967, and by the mid-1970s most of the economy revolved around oil. The hydrocarbons sector accounted for 77% 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 2012, Oman's proved reserves of petroleum total about 5.5 billion barrels, 24th largest in the world. 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.

In recent years, 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. Two major extensions of Oman's pipeline connections from gas deposits in the centre 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 and1.4% in 2000. Oman's natural gas reserves are estimated at 849.5 billion cubic metres, ranking 28th in the world, and production in 2008 was about 24 billion cubic metres per year.

Oman's other mineral resources include chromite, dolomite, zinc, limestone, gypsum, silicon, copper, gold, cobalt and iron. Several industries have grown up around them as part of the national development process which, in turn, have boosted the minerals sector's contribution to the nation’s GDP as well as providing jobs for Omanis.

The industrial sector is a cornerstone of the Sultanate’s long-term (1996-2020) development strategy for diversifying the sources of national income and reducing dependence on oil; it is also capable of helping to meet Oman's social development needs and generate greater added value for national resources by processing them into manufactured products.

Agriculture, often subsistence in its character, produces dates, limes, grains and vegetables, but with less than 1% of the country under cultivation Oman is likely to remain a net importer of food.

Tourism is being developed with the purpose of diversifying the country’s economy. The government plans careful and regular development of the tourist industry by preserving cultural and archaeological sites. Tourism is focused on the Muscat area and other historic interior sites such as the 17th century Ibadi fort at Nizwa. Other popular tourist activities include sand skiing in the desert, scuba diving, rock climbing, trekking, surfing & sailing, cave exploration, birdwatching, bull fighting and camel races.

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