According to this year’s State General Budget announcements, which were recently released, Oman’s GDP is expected to grow by 3% in 2025. This indicates that the government’s fiscal, regulatory, and market-driven policies have been successful in maintaining the nation’s economic recovery, which has been going on since 2022.
The Sultanate of Oman’s sovereign wealth fund, the Oman Investment Authority (OIA), released economic projections earlier this week that are in line with this GDP growth estimate at constant prices.
“Oman’s real GDP is expected to grow by 1.7% y/y in 2024 as a whole, up from 1.3% y/y in 2023. As growth in the first half currently stands at 1.9% y/y, and given that oil prices have edged lower since the start of the second half, the 1.7% y/y growth rate is likely to be achieved. Growth is projected to accelerate to 3.1% y/y in 2025, supported by the non-petroleum sector,” it said, as reported by Zawya.
According to the forecast, which was put together by the Authority’s Directorate of Economic and Investment Research, the Central Bank of Oman’s (CBO) monetary easing policies are anticipated to support GDP growth through 2025, in line with the US Federal Reserve’s rate-cutting trajectory.
“Coupled with low inflation levels, these measures are anticipated to stimulate investments, bolster private consumption, and attract higher FDI inflows,” the Authority’s investment research unit stated.
However, it did warn of potential negative effects on this optimistic outlook. Potential weaknesses might manifest as falling oil prices brought on by a decline in global demand, particularly from China. The potential consequences of the trade tariffs that Donald Trump, the incoming US president, has threatened are also concerning.
“Additionally, renewed US tariffs under Donald Trump and rising inflation could prompt a more hawkish Federal Reserve and maintain interest rates at elevated levels. This would negatively impact the Sultanate as the CBO would maintain interest rates at elevated levels, leading to lower credit demand, reduced investments, and higher government debt costs,” the OIA research commentary explained.