Oman posts 2.6% GDP growth in first quarter

MUSCAT, JULY 2
Oman’s economy grew 2.58 per cent in real terms in the first quarter of 2026, but weaker performance in manufacturing and construction showed that the next phase of diversification will depend increasingly on productivity, investment depth and stronger non-oil industrial activity.
The Ministry of Economy’s June 2026 Economic Performance Bulletin shows that gross domestic product at current prices fell 1.98 per cent to RO 10.29 billion, compared with RO 10.50 billion in the same period of 2025. The decline was mainly linked to a 16.47 per cent drop in average oil prices, which reduced the nominal value of oil-related activity.
At constant prices, however, the economy expanded, supported by a 4.59 per cent rise in oil activities and 2.36 per cent growth in non-oil activities. Services grew 3.68 per cent, while agriculture and fisheries rose 6.13 per cent, making them among the strongest contributors to real growth during the quarter.
The figures point to an economy that remains resilient despite lower oil prices and softer global trade conditions. But they also show that not all parts of the non-oil economy are moving at the same pace. Industrial activities contracted 1.24 per cent in real terms.
Within that, manufacturing declined 3.06 per cent, while construction fell 1.86 per cent. These sectors matter because they are central to local value creation, private-sector employment, supply chains and the wider Oman Vision 2040 objective of building a more diversified production base.
The bulletin also showed stronger growth in financial and insurance activities, which expanded 9.61 per cent, while transport and storage rose 3.11 per cent.
Wholesale and retail trade grew 1.57 per cent. These gains underline the role of services in supporting short-term growth, but they do not remove the need for stronger industrial performance.
Inflation rose to 2.33 per cent in the first quarter, compared with 0.85 per cent a year earlier, reflecting higher cost pressures linked to global and regional economic conditions. While still moderate by international standards, the increase requires monitoring because price pressures can affect households, firms and competitiveness.
The labour market showed improvement. The number of Omanis working in the private sector rose 8.81 per cent to 436,100 by the end of the first quarter, compared with 400,800 a year earlier. However, the bulletin noted that the share of Omanis in total private-sector employment remains below the desired level.
Foreign direct investment also continued to grow, rising 8.66 per cent to RO 32.20 billion by the end of the first quarter, from RO 29.63 billion a year earlier.
Yet the structure of investment remains heavily concentrated, with oil and gas accounting for 80.41 per cent of total FDI. Manufacturing represented 8.91 per cent, while financial intermediation accounted for 4.86 per cent. That concentration is important.
Oman’s fiscal position remained stronger, with revenues up 13.28 per cent to RO 2.99 billion and expenditure rising 8.63 per cent to RO 3.01 billion, narrowing the first-quarter deficit to RO 25 million. But the broader economic message is not only fiscal discipline.
The deeper message is that Oman has moved from a phase where stability was the main question to a phase where the quality of growth matters more.
The first-quarter data confirms resilience. It also shows that the next challenge is to turn non-oil growth into stronger productive capacity, broader investment and deeper private-sector employment.