The sultanate of Oman is one of the most economically successful countries in the Middle East and retains a positive economic forecast for 2014. Import and export trends have been shifting somewhat over recent years with diversification of the economy at the forefront. China receives the largest influx from Oman, but this weighting is shifting as India comes to the forefront. Let’s take a closer look at what this year holds for import-export in Oman.
The Continuing Importance of Crude Oil
Oman is one of the Middle East’s primary crude oil producers with economic growth historically being driven by oil exports. Production has remained at a relatively flat rate in recent years with a slight rise of 2.8% in daily production over 2013 compared with the previous year. This rise was due to the use of enhanced oil recovery techniques. Oil continues to account for the vast majority of exports although efforts to diversify are underway.
Oman’s major export continues to be oil, accounting for 61% in 2012 according to QNB’s economic report. Petrochemicals account for 8% of exports and LNG accounts for 7%. Metals and minerals are another significant export accounting for 6%. The growth of non-oil exports has been steadily increasing with aluminium and fertilisers being amongst the key drivers.
Oman predominantly exports to China, the Republic of Korea, Japan, India and Thailand. Export to India increased considerably in 2013 with growth of 177.2% compared to the previous year. There was also growth of exports to China. Those to Japan and Thailand dropped off slightly, however due to lower demand. China continues to be the leading export destination for Oman.
There was a marked increase in imports during 2012 and 2013 due to the robust economy and a spike in population growth. The increased amount of expats relocating to Qatar also played a part and financial support is now in place for businesses dealing with import services. Machinery and transport equipment are by far the most significant import with manufactured goods and fuels coming in second and third.
Oman’s Vision 2020
A consultation with the International Monetary Fund assisted in the development of Oman’s Vision 2020 plan, which places focus on developing small and medium sized enterprises in non-oil and gas sectors going forward. Substantial successes have been achieved thus far. The non-oil sector increased its share of real GDP to 70% in 2012 from 50% in 2011 and currently drives overall economic growth, according to Qatari financial institution QNB.
Diversification of the Economy
Despite this slight rise in oil production over 2013 it has been of primary importance for the sultanate to diversify its economy over recent years. Finite oil reserves will necessarily lead to the reshaping of the Omani economy over the coming years and the sultanate is offsetting its effect through diversification: a positive step towards shaking off its perceived dependency on fossil fuels.