Global Financial Crisis and Its Impact on the Economy of Oman

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Global Financial Crisis and Its Impact on the Economy of Oman

Journal Title: Saudi Journal of Business and Management Studies - Year 2018, Vol 3, Issue 7

Abstract

Abstract:The effects of the financial crisis in America, which happened to be spoken as one of the most advanced countries, spread from there to the other countries of the world and none were spared of its effects. For some of the countries, the effect was immediate whereas in some much smaller countries the effect was slow to come. One of the countries that have been lately affected by this is the Sultanate of Oman. This is a small high income economy that is highly dependent on its oil resources. It is a small member of the OPEC (Organization of Petroliam Exporting Countries) oil-cartel with a share of only 0.4% of the world’s proven oil stocks and 1% of the world production according to the EIU (Economist Intelligent Unit), CIA (Central Intelligence Agency) World fact book. This reflects the needs for carrying out policy changes in order to increase its exports and imports as well as to adopt measures whereby a diversification should be seen on its sources of revenue. Effective trade policies which shall include Omanization, promotion of the tax policy and improving both the SME (Small & Medium Enterprises) as well as the tourism industry shall help in the long run to nullify or reduce the negative impacts of the crisis. Further, if modernization in the existing political system is brought about and the investment by other countries, along with promotion of its own cottage industries like production of the Omani Halva, Date processing and Oudh and Frankincense export increased little if not much can help achieve to turn around the present scenario. Although, there is huge number of published researches in global crisis, little effort has been undertaken to study the impact of global crisis in Oman. In view of this, the main purpose of this paper is to illustrate, using empirical evidence, the extent to which the global crisis has had an impact on the performance of Oman. The aim of this study is to highlight; 1) The impact of global crisis on the various sectors of the Sultanate of Oman. 2) The extent to which Sultanate of Oman was affected by the global crisis. 3) Measures to overcome the crisis. The data used to answer these aims include all relevant statistics related to Oman. It is concluded that with the decline of the oil prices, the Sultanate was the first in the Gulf to address its negative repercussions, taking a series of measures to cut costs, restrict subsidies to its citizens, and raise the price of water, electricity, and other public services. Oman’s adoption of cost-cutting programs as well as its use of external loans to address the national deficit are not new strategies and have been adopted by other Gulf States as a response to the oil slump.The study can be extended in future by investigating the banks and other non-bank financial institutions of the country to examine and document the overall effect of crisis on financial system of Oman. Keywords: Global crisis, Omanization, OPEC, GEC, Diversification.

Authors and Affiliations

MadhuDhansingh Edwin

Keywords

EP ID EP398355
DOI -
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