Country Trade Risk Index (ERI): 104.33
Country risk reference rating: 5 (5/9)
Country Risk Outlook: Negative
Economic and trade risks
Oman is a developing country and a high-income country. It implements a free and open economic policy, uses oil revenue to vigorously develop the national economy, strives to attract foreign investment, introduce technology, and encourage private investment. In order to gradually change the economy’s dependence on oil and achieve diversification of fiscal revenue sources and sustainable economic development, the government vigorously promotes industrial diversification, employment Omanization and economic privatization, increases investment in infrastructure construction, and expands the participation of private capital. .
Oman’s exports are single. In 2011, the domestic political situation was turbulent. Most of the government finances were used for subsidies. The economy was significantly affected by the fluctuation of international oil prices, and fiscal revenue was significantly reduced. GDP growth rate dropped from 5.6% in 2010 to 0.3% in 2011. In 2012, the unrest in Oman subsided and the government took a series of measures to restore the economy. Fiscal revenue increased significantly and the GDP growth rate jumped to 8.3%. In recent years, the Omani government has been committed to economic diversification, working hard to change the single economic structure and ensuring long-term and sustainable economic development. The new five-year plan (2011~2015) allocated 1.5 billion riyals (approximately US$3.9 billion) Develop non-oil exports and infrastructure construction. However, the country still faces economic problems such as high unemployment and heavy reliance on foreign labor. The Central Bank of Oman has adhered to the monetary policy of pegging the rial to the U.S. dollar since 1986, maintaining a fixed exchange rate of 0.3845 rials per U.S. dollar.
Bilateral economy and trade
China has been running a trade deficit for a long time in China-Arab trade. China mainly exports mechanical and electrical products, steel and its products, high-tech products, textiles, etc. to Oman; the products imported from Oman are mainly crude oil. In 2010, bilateral trade volume reached US$10.72 billion, of which China exported US$940 million and imported US$9.77 billion, a year-on-year increase of 26.4% and 80.6% respectively. In 2011, affected by the turmoil in the Middle East, China increased its oil imports from Oman. The bilateral trade volume between China and Oman increased by leaps and bounds, reaching US$15.88 billion, of which China exported US$1 billion and imported US$14.88 billion. In 2012, Oman adopted a series of development and preferential policies towards China, and the trade flow between the two countries continued to increase. The bilateral trade volume reached US$18.78 billion, of which China exported US$1.81 billion and imported US$16.97 billion.
Business environment
Oman has a good business environment, ranking 47th among 185 economies in the “2013 Doing Business Report” released by the World Bank, which is higher than the average level of economies in the Middle East and North Africa region. In particular, it ranks highly in terms of property rights registration and tax burden. The Oman government has high administrative efficiency, a relatively complete tax system, and high transparency.
In recent years, Oman has taken a series of measures to improve the investment environment. First, implement preferential policies externally. Encourage investment in information technology, tourism, processing industry, agriculture, animal husbandry, medical care and other fields, and provide low-interest loans, tariff exemptions and export credit insurance to foreign companies, as well as regional preferential policies. However, there are also imperfect laws, low work efficiency, small market capacity, poor supporting capabilities, low professional investment protection and low contract enforceability, which hinder foreign cooperation to a certain extent.
Overall risk assessment
Oman has a stable political situation and good social security. Although Oman’s political situation was affected by the turmoil in North Africa in 2011, the government took timely and effective political and economic reform measures to bring the situation under control. Oman’s economic policies are coherent and stable. In recent years, the economy has grown steadily, fiscal balances have continued to improve, current accounts have continued to be in surplus, international balance of payments is in good shape, debt repayment pressure is not great, and the exchange rate has remained at a fixed level.
Generally speaking, since the turmoil in the region where Oman is located is difficult to calm down in the short term, future Sino-Arab cooperation will adopt a mutually beneficial and win-win attitude and treat Oman’s domestic and international political and security risks with caution.
Based on the analysis and assessment of the current overall situation, Oman’s country trade risk index (ERI) is 104.33, the country risk reference rating is 5 (5/9), the country risk level is medium to high, and the country risk outlook is negative . (Issuing agency: China Export and Credit Insurance Corporation)
