Oman 2025 outlook and prospects
Published: 01:01 PM,Jan 05,2025 | EDITED : 05:01 PM,Jan 05,2025
The 2025 outlook for Oman looks cautiously optimistic with the support of pillars of steady reform and diversification efforts. The country seems positioned for stability and continued growth driven by non-hydrocarbon exports, renewable energy projects, and contributions from strategic sectors.
According to the International Monetary Fund, Oman's real GDP was expected to grow by 0.7% in 2024, but Oman‘s real GDP increased by 1.9%. Despite challenges in hydrocarbon, Oman has had a favourable economic situation in 2024. International Monetary Fund (IMF) states that there will be a further increase in GDP by 2.7% in 2025, followed by 3.2% in 2026.
The main contributors to this growth will be economic diversification, increased private sector investments, and an expanding hydrocarbon sector. The World Bank has also forecasted an average economic expansion of 3.2% for 2025-2026. The 2025 state budget is designed to enhance non-oil revenue growth, maintain stability, improve public spending, and reduce public debt to support economic stability and diversification.
2025 will focus on strategic sectors like manufacturing, logistics, tourism, fisheries, mining, and education. The non-hydrocarbon sector is projected to grow by 4.3%, with export growth projected to accelerate to 13.6% in 2025. The Government of Oman is moving steadfastly in its nationalization drive with targets of 20% to 50% in transportation and logistics and 50% to 100% in the communication and technologies sector by 2026.
The SME sector will significantly contribute to Oman‘s economic growth in 2025. The SME is estimated to contribute 12.9% of the GDP, creating employment for 33,990 individuals. In Oman, SMEs represent 14.1% of all businesses.
To further support the growth and development of SMEs, the financial sector aims to allocate 5.5% of the total bank loan portfolio to SMEs in 2025. Oman is expected to face some challenges in the current deficit. In 2023 the current account deficit was 0.2 % of the GDP; in 2024, it grew to 1.1%. The expected decline in oil prices is estimated to widen further to 1.6% of the GDP in 2025. The government of Oman aims to reduce the public debt by enhancing non-oil revenue growth and improving public spending.
While Oman's economic and investment outlook in 2025 appears cautious and optimistic, with projections of a GDP of 2.7% and accelerating efforts in diversification into non-hydrocarbon exports, several challenges warrant a critical eye. The country is still heavily reliant on oil reserves, which makes them vulnerable, as evidenced by the OPAC+ impact of production cuts in 2024.
However, the government managed to mitigate the negative effect on the economy. Diversification efforts are promising and have made progress, but they face hurdles in developing nascent non-oil sectors and attracting sufficient investment. The widening account current account deficit also raises concerns about the long-term fiscal sustainability.
The nationalization drive is booming, but the country still needs to factor in the need for foreign expertise in emerging sectors.
The reforms and efforts towards Vision 2040 are progressing, and the pace of implementation and their effectiveness are leading to a diversified knowledge-based economy. Still, the global economic landscape, including the potential of oil price vulnerability and geopolitical escalations in the Middle East, poses a cloud of unpredictability to Oman’s 2025 prospects.
While there are challenges with the widening current account deficit, the expected dipping oil prices, and geopolitical tensions, the country needs to progressively move forward with diversification efforts towards sustainable growth and development. Rigorous implementation of strategies and adapting to the BANI world construct will ensure that Oman has a positive and progressive 2025.
According to the International Monetary Fund, Oman's real GDP was expected to grow by 0.7% in 2024, but Oman‘s real GDP increased by 1.9%. Despite challenges in hydrocarbon, Oman has had a favourable economic situation in 2024. International Monetary Fund (IMF) states that there will be a further increase in GDP by 2.7% in 2025, followed by 3.2% in 2026.
The main contributors to this growth will be economic diversification, increased private sector investments, and an expanding hydrocarbon sector. The World Bank has also forecasted an average economic expansion of 3.2% for 2025-2026. The 2025 state budget is designed to enhance non-oil revenue growth, maintain stability, improve public spending, and reduce public debt to support economic stability and diversification.
2025 will focus on strategic sectors like manufacturing, logistics, tourism, fisheries, mining, and education. The non-hydrocarbon sector is projected to grow by 4.3%, with export growth projected to accelerate to 13.6% in 2025. The Government of Oman is moving steadfastly in its nationalization drive with targets of 20% to 50% in transportation and logistics and 50% to 100% in the communication and technologies sector by 2026.
The SME sector will significantly contribute to Oman‘s economic growth in 2025. The SME is estimated to contribute 12.9% of the GDP, creating employment for 33,990 individuals. In Oman, SMEs represent 14.1% of all businesses.
To further support the growth and development of SMEs, the financial sector aims to allocate 5.5% of the total bank loan portfolio to SMEs in 2025. Oman is expected to face some challenges in the current deficit. In 2023 the current account deficit was 0.2 % of the GDP; in 2024, it grew to 1.1%. The expected decline in oil prices is estimated to widen further to 1.6% of the GDP in 2025. The government of Oman aims to reduce the public debt by enhancing non-oil revenue growth and improving public spending.
While Oman's economic and investment outlook in 2025 appears cautious and optimistic, with projections of a GDP of 2.7% and accelerating efforts in diversification into non-hydrocarbon exports, several challenges warrant a critical eye. The country is still heavily reliant on oil reserves, which makes them vulnerable, as evidenced by the OPAC+ impact of production cuts in 2024.
However, the government managed to mitigate the negative effect on the economy. Diversification efforts are promising and have made progress, but they face hurdles in developing nascent non-oil sectors and attracting sufficient investment. The widening account current account deficit also raises concerns about the long-term fiscal sustainability.
The nationalization drive is booming, but the country still needs to factor in the need for foreign expertise in emerging sectors.
The reforms and efforts towards Vision 2040 are progressing, and the pace of implementation and their effectiveness are leading to a diversified knowledge-based economy. Still, the global economic landscape, including the potential of oil price vulnerability and geopolitical escalations in the Middle East, poses a cloud of unpredictability to Oman’s 2025 prospects.
While there are challenges with the widening current account deficit, the expected dipping oil prices, and geopolitical tensions, the country needs to progressively move forward with diversification efforts towards sustainable growth and development. Rigorous implementation of strategies and adapting to the BANI world construct will ensure that Oman has a positive and progressive 2025.