Export diversification key to Oman’s sustainable growth: IMF

 MUSCAT: Export diversification will be critical to Oman’s long-term economic sustainability, according to a new International Monetary Fund (IMF) report, which urges faster development of a diversified tradables sector despite progress in reducing reliance on hydrocarbons.
Titled ‘Beyond Oil: Accelerating Export Diversification for Sustainable Growth’, the report highlights the finite nature of Oman’s hydrocarbon resources and oil-price volatility, arguing that a broader export base is essential to support growth, external balances and job creation.
“Currently, non-hydrocarbon activities concentrate primarily in low-added-value, non-tradable sectors that rely on low-skilled labour, while most manufacturing products are imported. A sustained decline in hydrocarbon revenues would weigh down on growth, as well as to external and fiscal positions. Strengthening non-hydrocarbon tradables — manufacturing and tradable services — is essential to broaden the export base, generate foreign currency earnings, improve productivity and create high-quality jobs for Oman’s growing labour force”, the paper stressed.
“Achieving these goals will require sustained structural reforms aimed at improving the business climate, boosting human capital, enhancing infrastructure and logistics performance; and incentivising investment in higher-value-added activities”, the IMF staff further said, noting that the 11th Five-Year Development Plan presents a strategic opportunity to set clear priorities and sequence reforms to support this transition.
The report calls for deeper private sector participation, including reducing the state’s economic footprint, accelerating labour market reforms, streamlining regulations and improving SOE governance. It also stresses the importance of deeper integration into regional and global value chains, leveraging Oman’s strategic Arabian Sea location and special economic zones such as Duqm and Sohar.
SEZs and industrial cities could act as catalysts for export diversification, provided industrial policies are well-targeted, time-bound and supported by strong governance. Linking SEZs to local SMEs, building sector-specific skills and embedding sustainability standards would strengthen domestic spillovers.
Finally, the IMF emphasises the need to invest in human capital, innovation and financing — particularly venture capital and green finance — supported by stronger institutions and credible fiscal frameworks to sustain reform momentum and reduce exposure to oil price cycles.