English abstract
Oman is an oil exporter in the Arabian Gulf and has a rapidly growing economy. Oil and gas
are extending the economy, with revenues from petroleum products enabling Oman to achieve
remarkable development over the last five decades. However, Oman's dependence on oil
threatens the economy's ability to sustain GDP, which is surrounded by many uncertainties that
compel it to find suitable and effective alternatives without any chance of failure. This research
is conducted to explore the impact of Oman's dependence on oil on economic growth. This
thesis attempts to answer the question of "How can Oman successfully diversify its economy
and what are the effects of oil dependence on the Omani economy in both the short and longterm". Exploratory data analysis using primary and secondary data is used to study the
relationship between Oil and GDP and its impact on the growth of the Omani economy since
1970. The government recognizes that Omani economy is highly hydrocarbon-related, and that
oil and natural gas reserves will be depleted in the near future. Much attention had been paid
in recent years by the government of Oman on the development of industry, trade, and tourism.
According to the estimates of 2018, Oman now stands in a crossroads; most of the country's
proven oil reserves, estimated at 5.4 billion barrels, with present rate of extraction the oil could
be depleted by 2036 (British Petroleum, 2020). Economic diversification's need is a must for
economic growth and socio-political stability of the country. This need is of utmost importance
for Oman since its oil export dependency is high.
This research found that one of the reasons for economic growth is the boom in the oil industry.
In the short-run, Oman has generally managed to maintain economic growth at an acceptable
pace thanks to increased international oil prices. However, in the long term, the Omani
economy has been suffering from the effects of fluctuations in oil prices. This resulted in a
deficit in diversifying the productive base and a negative impact on Oman's economic growth.
After a detailed analysis of many parameters, the research concluded that Oman has a long way
to diversify its economy. A combination of strict fiscal policy focused on the actual
implementation of development and diversification as well as industrialization might
effectively protect the country's economy from further global shocks and help increase the
likelihood of the country achieving consistent economic growth.
