Oman's real GDP to reach 2.9% in 2025: IMF

MUSCAT, OCT 21

Oman's economy is set for a substantial upswing, with the International Monetary Fund's (IMF) October 2025 World Economic Outlook (WEO) projecting a significant acceleration in real GDP growth, largely driven by an anticipated relaxation of oil production cuts and continued structural reform efforts. The Fund now expects Oman’s real GDP to expand by 2.9 per cent in 2025, a marked increase from the 1.7 per cent recorded in 2024. This positive momentum is forecast to strengthen further, achieving robust 4.0 per cent growth in 2026.

This strong outlook for Oman contrasts with moderate global projections and is slightly ahead of the expected regional acceleration. Growth in the Middle East and Central Asia is projected to accelerate from 2.6 per cent in 2024 to 3.5 per cent in 2025 and 3.8 per cent in 2026, positioning Oman as a key driver of the region's stronger performance by 2026. The optimism is anchored by the government's sustained commitment to Oman Vision 2040 and a successful track record of fiscal prudence.

The WEO points to several underpinning factors for Oman’s strengthened position. The primary driver for the accelerated real GDP growth is the expected rebound in hydrocarbon activity following the gradual unwinding of voluntary Opec+ production quotas. Critically, non-hydrocarbon sectors — supported by investments in logistics, manufacturing and green energy — are also maintaining positive growth momentum, a necessity for long-term diversification.

Fiscal discipline has been central to the country's improved fundamentals. The IMF highlights the use of hydrocarbon windfalls to drastically reduce public debt, which has fallen from a peak of 68 per cent of GDP in 2020 to an estimated 34 per cent in 2024. This success has helped the country achieve successive fiscal surpluses since 2022, enhancing financial buffers and strengthening the capacity to absorb external shocks. Additionally, the fiscal break-even oil price has been substantially lowered to approximately $57 per barrel, according to IMF estimates.

This environment of stability has directly spurred investment. Oman’s credit rating was upgraded to investment grade in late 2024, reflecting increased investor confidence and a corresponding acceleration of foreign direct investment (FDI) into strategic non-oil sectors. Furthermore, the banking sector remains a pillar of strength, described by the IMF as well capitalised, liquid and profitable, with strong asset quality supporting continued credit growth to the private sector.

Despite the robust growth and fiscal improvements, the report highlights a key vulnerability in the external position. The Current Account Balance, which posted a strong surplus of 2.9 per cent of GDP in 2024, is projected to swing into a deficit of 1.0 per cent in 2025 before slightly recovering to a deficit of 0.7 per cent in 2026. This shift is primarily attributed to a projected moderation in oil prices and slower growth in non-oil exports.

On the price front, the inflation outlook remains benign. Consumer Prices are projected to rise modestly from 0.6 per cent in 2024 to 0.9 per cent in 2025 and 1.5 per cent in 2026, remaining well contained.

The IMF stresses that accelerating structural reforms is critical to mitigate the external risks posed by the Current Account deficit and secure long-term stability. Continued focus on enhancing non-hydrocarbon fiscal revenues — including bolstering tax collection efforts — deepening local capital markets and advancing state-owned enterprise (SOE) reform are seen as essential steps to achieve the diversification goals enshrined in Oman Vision 2040.