Adaptability, resilience and actionable strategies key to Oman’s future outlook

Oman as of 2025 has a recovering economy due to the ambitious goal reforms set. At the same time, new hurdles posed have to be grappled with as well. The Tenth Five-Year Development Plan for 2021-2025 has greatly increased the pace of development by providing insight and so, the focus of policymakers now has to be on capturing the growth from the oil sector, while also maintaining the non-oil sector growth, to be able to provide sustainable growth for Oman Vision 2040.
Modest Growth, Oil Revival
The same sources expect Oman's real GDP to grow by 2.2% in 2025, up from 1.7% in 2024. While the growth is modest, certain forecasting agencies expect a growth potential of 2.6 to 2.8% if the oil sector rebounds in addition to the consistent growth of the non-oil sector.
The most significant driver of this recovery is oil. While the oil sector is expected to grow by 1.3% in 2025 after 2024's 3% contraction, the oil sector's growth contribution to the economy is expected to rise.
Diversification Push
Oman is making efforts to balance the oil sector and reduce the reliance on oil. Non-oil sectors growth is forecasted to be 2.7% which is lower than previous years, but is crucial to building an economy with resilience.
Market outlooks show promise in the following areas:
• Tourism has attracted foreign visitors, the construction of luxury hotels and integrated resorts investments.
• The developments of manufacturing, agriculture, fisheries and port logistics has spurred driven investments in infrastructure development and special economic zones.
• Targets of Oman’s sustainability goals, such as the energy transition and development of renewable energy and nascent green hydrogen, pose promising opportunities.
Fiscal and Policy Reforms
Sustained economic Oman achieved stability through multiple reforms:
• Directly impacting only 1 per cent, the Royal Decree issued on 2025 to impose a 5% personal income tax starting 2028 for individuals earning RO 42,000, has broad implications for revenue base diversification and oil income reliance erosion.
• Cautious budgets, rational deficit spending and rein tracks conservatively assume oil price revenue as a Fiscal Discipline. The government spending, investment outlines and the Medium-Term Fiscal Plan steer.
• Augmented governance, sounder the banking sector and better investment prospects are expected from central bank and banking law along with these revised regulations.
Social Dimensions and Risks
Subsidies and the relatively stable of the global commodity with expected inflation rate holding below 1.5% for 2025.
Regardless, Oman is still under certain risks:
•Oil price fluctuations still constitute an external risk. Unanticipated downturns in global demand or supply disturbances can easily throw a fiscal policy off balance.
•An economic downturn, supply side limitations, or increased international monetary conditions may impede investment or erode foreign currency resources.
•Pressure on employment opportunities, particularly on Omanis and equitable distributive benefits of growth pose persistent obstacles. Social inclusion, education and skills development align to fulfil labour market shortages.
•Water scarcity, climate change and other environmental determinants of growth pose easier challenges. Oman is investigating ways of using smart water systems and other renewable energy sources to meet growing demand.
Looking ahead, Oman remains committed to advancing towards Oman Vision 2040 policies. An evolving economy, with non-oil derivatives infrastructure, is predicted for the remainder of the country’s Tenth Plan.
Oil sector growth, along recent activity across non-oil sectors, will signify pricing strategies, foreign investment and other domestically structured policies.
If external conditions remain favourable for reform, Oman will construct a modern economy less sensitive to international price instability. The country’s investments in infrastructure, sustainable development, education and human capital are expected to strengthen.
Conclusion
The outlook for the year 2025 appears filled with a sense of hope. Oman is economically optimistic due to the steadily rising GDP, along with the ongoing policy reforms and the valuable contribution of non-oil sectors. However, Oman still faces several challenges. The remaining uncertainties do not seem to bother the country. Oman appears to be increasingly focused on strategy and is setting important building blocks for a better future, which is complex and diverse. While Oman continues to depend on oil, its relevance is no longer the defining feature.