Real GDP expected to grow by 2.9%

The Central Bank of Oman's (CBO) Annual Report reviews the domestic economic environment, highlighting trends in real activity, inflation, fiscal and external positions and the performance of the banking sector. Economic activity continued to expand in 2024, demonstrating its resilience, boosted by stronger non-hydrocarbon sector performance. The government advanced further on its comprehensive reform agenda, underpinned by Oman Vision 2040.

The report also provides a comprehensive assessment of the Sultanate of Oman’s macroeconomic and financial developments during 2024, while highlighting the positive outlook for 2025.

Oman’s outlook remains broadly positive despite global uncertainties. Real GDP is expected to grow by 2.9 per cent in 2025, led by non-hydrocarbon sectors. Inflation will remain low, fiscal and external balances are projected to record small deficits, and public debt is expected to remain sustainable at around 35.6 per cent of GDP.

The global economy showed notable resilience in 2024 despite earlier concerns of a prolonged slowdown. Aggressive monetary policy tightening in advanced economies, together with ongoing geopolitical tensions had initially weighed on confidence. However, resilient labour markets, lower commodity prices, and improved supply conditions allowed major central banks to gradually shift towards more accommodative stances in the second half of the year.

Despite these challenges, the Omani economy delivered strong growth in 2024, driven by the government’s reform agenda and the continued expansion of the non-hydrocarbon sector. Inflation remained low, supported by well-coordinated monetary and fiscal policies. Fiscal and external balances posted surpluses in 2024, and public debt continued its declining path. Oman's sovereign credit rating was upgraded to investment grade. The banking sector remained highly liquid and well capitalised. Backed by sound macroeconomic fundamentals, the domestic environment in 2024 provided a strong platform to advance the next phase of structural transformation under Oman Vision 2040.

Oman’s economy performed strongly in 2024, expanding by 1.6 per cent compared to 1.4 per cent in 2023, supported by higher non-hydrocarbon activity and effective policy reforms. Non-hydrocarbon GDP grew by 3.5 per cent, reflecting robust gains in manufacturing, services, and logistics. Industrial output reversed the contraction of the previous year, with manufacturing alone growing by 7.5 per cent. Services expanded by 3.0 per cent, led by wholesale and retail trade (5.3 per cent) and transport and storage (4.0 per cent).

Inflation in Oman in 2024 was markedly lower than the previous year. A strong rial, combined with administrative and fiscal measures, helped contain inflation. The average consumer price inflation in Oman was 0.6 per cent in 2024, down from 0.9 per cent in 2023, reflecting continued declines in transport prices and moderated food prices. Oman’s inflation remains among the lowest in the region, supported by sound monetary and fiscal policies.

Oman's fiscal position continued to strengthen in 2024, maintaining a surplus driven by favourable oil prices, prudent policy measures and improved fiscal discipline. The government recorded a fiscal surplus of 1.3 per cent of GDP, marking steady progress towards its fiscal consolidation and intensified efforts to achieve fiscal sustainability. These efforts, supported by effective debt management, reduced the public debt-to-GDP ratio to 35.0 per cent in 2024, down from 37.1 per cent in 2023.

The external sector remained robust in 2024. The current account recorded a surplus of 2.9 per cent of GDP, supported by favourable oil prices, growth in non-oil exports, the government's rationalisation of current expenditures, and attraction of various foreign direct investments (FDI). Importantly, worker remittances remained stable in 2024, in line with the economy’s demand for foreign labour, and partly due to a growing inclination among Omanis towards private-sector employment.

EXCHANGE RATE

The exchange rate peg has been instrumental in delivering low and stable inflation, serving as an appropriate nominal anchor in light of Oman’s economic structure. Throughout 2024, the CBO maintained its commitment to the established monetary policy framework, aimed at enhancing the effectiveness of liquidity management operations that support domestic economic activity, while remaining aligned with the accommodative monetary stance of the US Federal Reserve. Amidst these developments, CBO lowered its policy rate to reach 5.145 per cent by the end of December 2024.

The banking sector continued to align with the needs and demands of economic development, with increased emphasis on digital transformation to improve the delivery of financial services.

BANKING SECTOR

In 2024, the banking system in Oman showed improved performance with total assets of the banking sector increasing by 6.6 per cent to reach RO 44.6 billion. Total credit increased to RO 32.5 billion in 2024 showing a Y-o-Y growth of 6.7 per cent compared to 4.3 per cent in December 2023. This growth in credit was supported by stronger deposit mobilisation. Total deposits grew by 9.1 per cent, reaching RO 31.7 billion in 2024 compared to their level in December 2023.

Banking profitability remained healthy, reflecting financial resilience. Gross non-performing loans (NPLs) remained reasonably low, at 4.5 per cent as of December 2024. The capital adequacy ratio (CAR) stood at 18.2 per cent at the end of 2024 compared to 19.7 per cent at the end of 2023. Liquidity conditions of banks remained comfortable, as indicated by regulatory liquidity ratios.

FRAMEWORK

In 2025, the New Banking Law (Royal Decree No 2/2025) modernised the regulatory framework, aligning with international best practices and reinforcing the sector’s capacity to support economic diversification. A key initiative introduced in 2025 requires banks to allocate credit to priority sectors — including agriculture, fisheries, mining, logistics, tourism, and renewable energy — thereby aligning financial intermediation with national development priorities.

The conclusion of the 10th Five-Year Development Plan in 2025 marks an important milestone in advancing Oman Vision 2040 objectives. Economic diversification, fiscal sustainability, private sector participation, and institutional reforms have laid the groundwork for stronger, more inclusive growth. With ongoing reforms and continued resilience in the banking sector, Oman is well positioned to navigate global challenges and advance its long-term development strategy.

The CBO Annual Report provides a detailed macroeconomic analysis of Oman’s major sectors of the economy through five Chapters namely Current Assessment and Macroeconomic Outlook (Chapter I); Output, Employment and Prices (Chapter II); Public Finance (Chapter III); Money, Banking and Financial Institutions (Chapter IV); and External Sector Developments (Chapter V). The Report also presents the audited balance sheet of the CBO and the independent auditor’s report to the Board of Directors. — ONA