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- GDP (PPP):
- $90.1 billion
- 5.0% growth
- 6.3% 5-year compound annual growth
- $29,166 per capita
- Inflation (CPI):
- FDI Inflow:
Oman’s economic freedom score is 67.4, making its economy the 48th freest in the 2014 Index. Its score is 0.7 point lower than last year due to declines in the management of government spending and labor freedom that outweigh improvements in investment freedom and monetary freedom. Oman is ranked 6th out of 15 countries in the Middle East/North Africa region, and its overall score is above the world and regional averages.
Over the 20-year history of the Index, Oman’s economic freedom has dropped by nearly 3 points. Improvements in five of the 10 economic freedoms, including fiscal freedom, investment freedom, and trade freedom, have been more than offset by declines in rule of law and regulatory efficiency. Scores for freedom from corruption, property rights, and business freedom have deteriorated by over 15 points. Oman’s economy has been rated “moderately free” for the past 19 years.
Overall economic freedom remains constrained by state involvement in the economy through public enterprises. Reliance on a large state-owned energy sector that boosted economic expansion over the past decade has left Oman vulnerable to external shocks.
In early 2011, in response to turmoil throughout the region, Sultan Qabus bin Said changed cabinet ministers and promised political and economic changes and more government jobs. A Consultative Council elected in October 2011 has expanded regulatory and legislative powers. Municipal councils elected in December 2012 will advise the executive branch on local needs. Oman is a relatively small oil exporter. The government is trying to expand exports of natural gas, develop gas-based industries, and encourage foreign investment in petrochemicals, electric power, and telecommunications. It also stresses “Omanization” (replacing foreign workers with local staff to reduce chronically high unemployment). Oman joined the World Trade Organization in 2000 and signed a free trade agreement with the United States in 2006.
Although corruption has not been perceived as serious, the public has recently shown heightened awareness of it despite the lack of freedom of information provisions in the legal code. In 2012, public-sector employees became subject to financial disclosure requirements. The judiciary is not independent and remains subordinate to the sultan and the Ministry of Justice. Property rights are well protected.
Oman has no income tax, and the corporate tax rate is 12 percent. There is also no consumption tax or value-added tax (VAT). The overall tax burden is 2.2 percent of gross domestic income. Government expenditures equal about 38 percent of GDP. Oil and gas revenues, which constitute 84 percent of total revenue, have helped to keep public debt low at less than 10 percent of GDP.
Launching a business takes five procedures, but minimum capital requirements equal over twice the level of average annual income. Obtaining necessary permits takes more than 150 days. Discouraging more dynamic job growth, labor laws enforce the “Omanization” policy that requires private-sector firms to meet quotas for hiring native Omani workers. The state influences prices through an extensive subsidy system.
Oman’s average tariff rate is 3.2 percent. Licensing procedures for several products deter imports. Foreign investors may not own land. The financial sector continues to evolve, and commercial banks perform well. Most credit is offered at market rates, but the government uses subsidized loans to promote investment. The Muscat Securities Market is active and open to foreign investors.