Oman’s economic growth is expected to gain momentum in 2025-2026, with a projected average expansion of 3%, driven by ongoing government reforms and growing investment in non-oil sectors, according to the World Bank.
In its latest Gulf Economic Update, the World Bank revised its outlook for the sultanate, noting that GDP growth is likely to slow in 2024, largely due to the continued extension of voluntary oil output cuts by OPEC+. Despite this, the bank forecasts that Oman’s economic performance will improve in the subsequent years, buoyed by higher oil production and sustained progress in diversifying the economy away from hydrocarbons.
‘Oman’s overall GDP growth is projected to pick up over 2025-2026, averaging 3.0%, underpinned by increasing oil output alongside structural reforms and investments in non-oil sectors,’ the World Bank said. ‘This sets the stage for higher non-oil growth in the medium term.’
For the broader GCC region, the World Bank anticipates subdued growth of 1.6% in 2024. However, the region is forecast to expand at a more robust pace of 4.2% in 2025-2026, with the non-oil sector leading the charge. Non-oil activities in the GCC are projected to grow by 3.7%, reflecting the continued success of diversification efforts and ambitious reforms across the region.
Inflation within the GCC is expected to remain relatively stable, at a projected 2.1% in 2024, supported by subsidies, fuel price caps, and currency pegs. However, inflationary pressures in the housing sector persist in several countries, and fiscal balances continue to be strained by rising government spending amid reduced oil revenues, with notable variation across the region.
“The region has shown remarkable resilience in the face of global disruptions, moving steadily on their diversification agenda. It will be important to continue to exercise prudent economic policies to secure a sustainable future of growth”, said Safaa el Tayeb el-Kogali, the World Bank GCC Country Director.
Saudi Arabia is expected to see modest GDP growth of 1.1% in 2024, driven primarily by a robust 4.6% expansion in the non-oil sector, which will partially offset a 6.1% contraction in oil GDP due to the extension of voluntary production cuts. However, the kingdom’s economic growth is forecast to accelerate to an average of 4.7% in 2025-2026, supported by rising oil output and continued diversification efforts. The non-oil sector’s growth is expected to stabilise at 4.5% in 2025-26.
In the UAE, GDP growth is estimated at 3.3% in 2024, driven by a sustained 4.1% expansion in the non-oil sector. Strong performance across tourism, real estate, construction, transport, and manufacturing has bolstered the UAE’s economic resilience. The country’s growth outlook is projected to further strengthen to 4.1% in 2025-2026, supported by a recovery in oil production.
Qatar’s economy is expected to grow modestly by an average of 2.4% in 2024-2025, before accelerating to 4.1% in 2025-2026, driven largely by an expansion in gas production. Bahrain’s economy is projected to improve to 3.5% in 2024, up from 3.0% in the previous year, with growth expected to moderate slightly to 3.3% in 2025-2026 as oil sector output increases.
Kuwait, however, faces a more challenging near-term outlook, with a contraction of 1% in 2024, due to the extended OPEC+ production cuts. Nevertheless, growth is expected to recover in 2025-2026, reaching 2.6%, driven by higher oil output and a ramp-up in infrastructure projects.
