THE LEGATUM PROSPERITY INDEX™ 2016

Bringing Prosperity to Life

Oman

Ranked 70th of 149

At a glance

Ranks

70 th on the Legatum
Prosperity Index™

51st
54th
90th
77th
26th
34th
104th
66th
137th

SUB-INDEX RANKINGS

In the Prosperity Sub-Index rankings, Oman performs best on Health and Safety & Security and scores lowest on the Natural Environment sub-index.

Visit our Rankings table to see how Oman compares to other countries.

Prosperity Gap

The ‘Prosperity Gap’ takes a country's GDP and uses it as the yardstick to measure a nation's expected Prosperity Index ranking.

Oman has a large prosperity deficit. Its level of under-delivery, typical of the Gulf region, is worse than the UAE’s but better than the rest of the Gulf. Oman’s prosperity deficit has slightly improved since the 2011-12 unrest.

Note:
In the chart above, each dot represents a country. The curve shows the general tendency with which prosperity increases as GDP per capita increases. If a country falls below the curve, then we can say that compared to all other countries, it is under-delivering prosperity for its citizens. Likewise, if a country rises above the curve, then we can say that it is over-delivering prosperity for its citizens. Learn more about the Prosperity Gap here.

Alternatively, have a look at the Prosperity Gap view on our Rankings table for a full list of countries and to see how each of them are performing on the various sub-indices.

Commentary

The Prosperity Index shows that Oman is caught between a rock and a hard place. In 2011 and 2012, the sultanate experienced widespread social and political unrest, unseen since the Dhofar War in the 1970s, in which the population of Dhofar province, with Iranian and British support, rebelled against the sultanate and were defeated. Unlike the post-Dhofar War period, which saw Oman radically reform and modernise, the response to the recent Omani spring has been a crackdown on civil liberties. Governmental restrictions on religious practice have tightened, for example, while measures of governance have worsened. Since 2012, policymaking has become more opaque and perceptions of public sector corruption have increased. An important demand of the protesters was a separation of powers between the executive and judiciary. Yet the judiciary remains strongly influenced by the executive branch, with the sultan making all judicial appointments, presiding over the Supreme Judicial Council and formulating judicial policy. Since 2012, Oman’s judicial independence and rule of law have deteriorated.

This level of Governance and Personal Freedom is, however, typical of the Gulf region. Oman’s Governance score ranks it above all its Gulf peers except for Qatar and the UAE. Its Personal Freedom score ranks above all its Gulf peers except for Qatar. Compared to the OECD, however, this doesn’t paint a promising picture.

Personal Freedom score (level of Personal Freedom) in Oman, the Gulf region, and OECD
While Oman enjoys greater Personal Freedom than the rest of the Gulf, it sits far behind the OECD average.

Oman breaks with its Gulf peers in a less positive light in terms of its Business Environment, where it only ranks above Kuwait and Yemen. Oman has a more rigid labour market, shallower broadband penetration, and a worse performance in the logistics index than most of its peers. During 2013, the government announced a $50bn infrastructure package to be spent over the subsequent five years. The aim is to promote private sector growth and FDI growth, job creation for Omanis, and to diversify away from oil exports. This latter goal is perhaps the significant challenge currently facing Oman.

Economic Quality in Oman is low and has deteriorated in recent years. A central issue is oil dependency. It performs badly on measures of export quality and export diversification, even compared to oil-dependent economies like Bahrain. The pressure to diversify is strong: Oman’s hydrocarbon reserves were estimated in BP’s 2014 Statistical Review of World Energy to last for another 16 years, compared to 66 years and 81 years in Saudi Arabia and the UAE respectively. It remains to be seen whether the government’s spending package, and its broader “Oman Vision 2040” long-term national strategy, can diversify Oman away from oil. Currently, low oil prices since mid-2014 and uncertainty about future price levels are putting pressure on the Omani economy and the government’s ability to reform, which saw a record budget deficit in 2015 and is forecast to see a slightly smaller deficit in 2016.


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Data

How to read this graph:
When comparing multiple countries on a spider chart, data points that appear
further away from the center represent a better performance to the points that are closer to the center.