MUSCAT: The lingering effects of former US President Donald Trump’s trade tariffs are poised to extract a heavy toll on Oman’s economy, with losses estimated at around $1 billion — or 0.8 per cent of national GDP — according to the International Monetary Fund’s (IMF) latest Global Economic Outlook.
Yet beyond the stark figures, it is the subtle, cascading consequences that economists find most concerning.
“While the direct trade impact is relatively small, despite high tariffs on steel and aluminum, most of the hit stems from lower oil prices, as hydrocarbons account for about 30 per cent of Oman’s GDP,” said Azza al Habsi, an economist based in Muscat. Her comment underscores how interconnected the global economy has become — and how trade tensions in one corner of the world reverberate through others.
Despite limited direct exposure to US tariffs, Oman — like many emerging economies — faces growth pressures not from blocked shipments, but from weakened commodity markets and strained global demand. Hydrocarbon exports, a backbone of the Sultanate of Oman’s economy, remain especially sensitive to such shifts.
The IMF has historically tended toward optimistic forecasts for emerging markets, a pattern it acknowledged in its own research, citing heightened uncertainty and commodity price volatility. Al Habsi cautioned that downward revisions may follow as global conditions remain fragile.
Pressure points are also appearing in fiscal planning. The IMF estimates Oman’s fiscal breakeven oil price at $57 per barrel for 2025, but national data suggests a steeper reality. “According to the 2025 budget published by the Ministry of Finance, we need around $65/barrel to balance this year’s spending,” Al Habsi noted.
Still, Oman’s current posture contrasts sharply with earlier crises. Fiscal reforms, disciplined debt management, and healthier reserves have left the country better shielded against external shocks.
“The positive news is that Oman has entered this period with a far stronger balance sheet compared to previous crises (2014 and 2020), with better buffers and resilience,” Al Habsi explained. She also pointed to the broader global context: many countries are responding to trade disruptions with policies similar to those deployed during the Covid-19 pandemic.
Crucially, Oman retains ample policy ammunition. “The Central Bank of Oman retains considerable tools to address liquidity challenges if needed, beyond just adjusting interest rates. Similarly, fiscal authorities have sufficient room to support the economy if necessary, and the Covid-19 fiscal playbook could be redeployed should conditions warrant,” she added.
As global trade dynamics continue to shift, the IMF’s warning — amplified by local economic voices — serves as a reminder: in today’s interconnected world, the aftershocks of distant policies can test the resilience of even the most prepared economies.
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