Economic Overview

The Sultanate of Oman has experienced remarkable economic growth since 2004, primarily driven by the exploitation of its oil reserves. Despite a contraction due to the pandemic, Oman's economic recovery continued in 2022 (+4.3% of GDP) and 2023 (+1.2%), supported by favourable hydrocarbon revenues. According to official governmental figures, Oman’s GDP at constant prices rose 1.6% year-on-year in 2024 to OMR 37.7 billion (USD 98.1 billion), while GDP at current prices dropped 3.0% to OMR 40.7 billion, driven by weaker oil activity. Non-oil sectors grew 3.7%, led by manufacturing (+8.5%), wholesale and retail trade (+7.1%), and financial services (+3.5%). Oil-related activities declined 3.6% in real terms due to lower crude output and prices. According to the IMF, real GDP growth is expected to rebound to 2.6% in 2025, driven by recovering hydrocarbon output (+1.0%) as OPEC+ cuts ease, and stronger non-hydrocarbon growth (+3.4%) supported by construction, manufacturing, and services. Over the medium term, non-hydrocarbon activity is set to rise to 4.2% as major private investments are rolled out.

Oman has made significant progress in strengthening its fiscal and external positions while advancing the implementation of Oman Vision 2040. The Medium-Term Fiscal Plan (MTFP), initiated in 2020, has played a crucial role in achieving fiscal sustainability by diversifying revenue streams, controlling expenditures, and prudently managing hydrocarbon windfall savings. The overall budget recorded a surplus of OMR 520 million, compared to OMR 830 million in the same period of 2023. Government revenues rose 4% to OMR 10.2 billion by October 2024, driven by oil revenues (+11%), goods and services taxes (+18%), and stable non-oil receipts. Public spending increased 8% to OMR 9.68 billion, including higher allocations for development projects and sectoral subsidies. The 2025 budget aims to maintain fiscal discipline, further reducing the non-hydrocarbon primary deficit, while keeping spending on social safety nets largely unchanged compared to 2024. Government net financial assets are projected to turn positive in 2025 for the first time since 2017, rising to 6.8% of GDP by 2029, driven by asset accumulation and modest deleveraging as debt approaches 30% of GDP. Oman is assessed to be at low risk of sovereign debt stress, supported by strong financial buffers that mitigate liquidity and solvency risks. Meanwhile, inflation is estimated to have remained low at 0.8% in 2024, gradually converging to 2% over the medium term, according to the IMF.

The National Centre for Statistics and Information (NCSI) reported a continued decline in Oman’s unemployment rate, which fell to 3.6% by November 2024. The rate is much higher for women than for men (at 10.3% and 1.9%, respectively) and is not expected to see significant changes in 2025. In recent years, the government introduced initiatives to address the high share of expatriate workers, including bans on foreign worker visas, to promote the employment of Omani citizens. In 2024, the number of foreign workers declined by around 1% compared to 2023, while Omani workers increased by approximately 0.5%. Additionally, the authorities have implemented a new labour law focused on modernizing regulations and enhancing working conditions and flexibility in the labour market. Several initiatives have been launched to bolster the employment of nationals in the private sector, including the Wage Protection System and providing wage support to private sector employers for hiring nationals.

Foreign Trade

Oman's economy is highly open, with trade constituting approximately 101% of the country’s GDP, according to the World Bank. The Sultanate primarily exports hydrocarbons and petrochemicals but has been striving to diversify its economy in recent years, with an increasing share of industrial products in total exports. In 2023, exports of oil accounted for 57.6% of total exports, while liquefied natural gas recorded a share of 11.6%. Other exports included iron ores (2.9%) and fertilisers (2%). On the other hand, imports were led by petroleum oils (22.4%), motor cars (5.7%), iron ores and concentrates (3.6%), and telephone sets (2.3% - data Comtrade).
 
In 2023, the United Arab Emirates was the main export partner (6.4% of total exports), followed by Saudi Arabia (5.0%), India (3.8%), South Africa (2.4%), the United States (2.3%), and Egypt (1.7%); whereas imports came chiefly from the United Arab Emirates (26.3%), Saudi Arabia (12.4%), China (7.3%), India (7.2%), and Qatar (5.6% - data Comtrade). Oman benefits from high-quality port facilities that facilitate trade; however, slow procedures and rigid labour laws remain significant obstacles. Customs duties are relatively low, and there are few trade barriers in the country, with goods produced in Gulf Cooperation Council (GCC) member countries being duty-free if accompanied by a certificate of origin. The country has more than 105 agreements with countries around the world.

According to WTO data, Oman's goods exports totalled USD 62.7 billion in 2023, marking a 5% decrease from the previous year due to higher hydrocarbon prices, while imports declined at a faster pace (-5.6%), to USD 36.3 billion. Despite being a net service importer, the country maintains a structural trade surplus, although it is highly sensitive to fluctuations in hydrocarbon prices. According to preliminary data from the National Centre for Statistics and Information, merchandise exports grew 6.8% to OMR 24.2 billion in 2024, driven by an 18.4% rise in oil and gas exports to OMR 16.3 billion. However, non-oil exports fell 16.3%, with declines in minerals, chemicals, and live animals. Imports increased 12.1% to OMR 16.7 billion, led by higher demand for electrical machinery, mineral products, and transport equipment.