- Oman’s economy has thus far shown resilience amid the war in the Middle East, supported by the location of its major ports outside the Strait of Hormuz bottleneck and continued prudent policies. However, the geopolitical situation remains fluid, with elevated uncertainty and downside risks.
- Favorable oil prices and continued commitment to fiscal discipline are expected to generate sizable fiscal and external surpluses, and support higher nonhydrocarbon growth, over the medium term. Sustaining progress in implementing fiscal and structural reforms will be essential to reinforce fiscal and external sustainability.
- The banking sector remains well-capitalized and liquid, benefiting from strong buffers heading into the regional conflict and prudent oversight by the Central Bank of Oman.
Washington, DC: A team from the International Monetary Fund (IMF), led by Mr. Abdullah AlHassan, visited Muscat, Oman, during June 7-15, 2026, to discuss economic and financial developments, the outlook, and the country’s policy priorities. At the conclusion of the mission, Mr. AlHassan issued the following statement:
“Oman’s economy continues to demonstrate resilience in the face of headwinds from the war in the Middle East, with adverse impacts being thus far limited to inflationary pressures and select non-hydrocarbon sectors. Oman’s oil and natural gas infrastructure has remained largely unaffected, enabling Oman to increase oil production and exports amid regional supply disruptions.
“The strong growth momentum continues, while inflation is accelerating. Real GDP growth accelerated in 2025 to 2.4 percent (from 1.6 percent in 2024), supported by both the hydrocarbon and nonhydrocarbon activities. Growth is projected at around 3.7 percent in 2026, driven by increased oil production, and 3 percent in 2027. Nonhydrocarbon growth is expected to ease to 2.5 percent in 2026, reflecting the impact of the regional conflict on tourism and construction, before accelerating to 3.2 percent in 2027 on the back of a broad-based recovery. Average inflation remained contained at 1 percent in 2025, before rising to 2.8 percent (year-on-year) during January-May 2026 driven by higher food and transportation prices.
“Fiscal and external positions are set to strengthen, supported by higher oil revenues and continued fiscal discipline. After narrowing to 0.6 percent of GDP in 2025, reflecting lower oil prices and increased capital spending, the fiscal surplus is projected to widen to 4.5 percent of GDP in 2026 and 4.2 percent in 2027. Central government debt continues its downward trajectory, reaching 34.7 percent of GDP at end-2025. The current account balance posted a deficit of 1.9 percent of GDP in 2025 but is expected to shift to a sizable surplus in 2026 and 2027, at about 3 percent of GDP, shored up by stronger hydrocarbon revenues and robust growth in nonhydrocarbon exports.
“The banking sector remains resilient, underpinned by comfortable capital and liquidity ratios, strong asset quality, and profitability.
“Given the elevated uncertainty from the war, risks to the near-term outlook are tilted to the downside. A prolonged escalation of the war could lead to a deeper regional and global slowdown, weighing on tourism, nonhydrocarbon exports, and FDI inflows, and adversely affecting Oman’s growth prospects, as well as its fiscal and external positions. Upside risks stem from a swift resolution of the war, higher sustained oil prices and production, increased transportation and logistics activity in support of regional integration, and an accelerated pace of reforms under Oman Vision 2040.
“Going forward, sustaining momentum in implementing policy reforms will be key to accelerating economic transformation, while entrenching fiscal and external sustainability. Priorities include further improving tax administration, strengthening medium-term fiscal frameworks, transitioning to an active liquidity management framework, deepening the financial sector, improving SOEs’ transparency, increasing female labor force participation, and continuing to pursue renewable energy initiatives.
“The IMF team would like to thank the Omani authorities and other counterparts for the open and productive discussions and their warm hospitality.”
READ MORE: https://www.imf.org/en/news/articles/2026/06/15/pr-26206-oman-imf-staff-concludes-staff-visit-to-the-sultanate-of-oman
