Oman’s economy continues to expand, supported by low inflation, ongoing reform efforts, and an improved fiscal position, according to the International Monetary Fund (IMF), as reported by Muscat Daily.
An IMF team, led by César Serra, conducted its 2024 Article IV Consultation in Muscat from October 30 to November 13, 2024.
“Favorable hydrocarbon revenues and steadfast reform efforts are driving Oman’s economic growth,” Serra noted in a statement following the mission. Economic growth was 1.2% in 2023 and increased to 1.9% year-on-year in the first half of 2024, despite OPEC+ oil production cuts. Strong non-hydrocarbon sector growth played a significant role in offsetting the impact of reduced oil output.
The IMF highlighted that Oman’s non-hydrocarbon sector grew by 3.8% in the first half of 2024, fueled by expansions in construction, manufacturing, and services. Inflation eased to 0.6% from January to September 2024, compared to 0.9% in 2023.
Favorable Economic Outlook
Serra described Oman’s economic outlook as positive. Growth is projected to reach 1.2% in 2024, constrained by extended OPEC+-related oil production cuts, but is expected to rebound in 2025 with increased hydrocarbon production and robust non-hydrocarbon sector growth.
Strong Fiscal and Financial Position
Oman’s fiscal and current account balances remain comfortably in surplus, with public debt declining further. The country’s sovereign credit rating was recently upgraded to investment grade, reflecting significant improvements in economic fundamentals.
However, the IMF cautioned that surpluses might moderate in the medium term if oil prices soften further. Serra emphasized the importance of maintaining fiscal discipline, advancing tax reforms, and phasing out untargeted subsidies to sustain fiscal sustainability and intergenerational equity.
Progress Under Vision 2040
Reform initiatives under Oman Vision 2040 are advancing decisively. The new social protection law has been implemented successfully, while labour market reforms and measures to enhance the business environment, attract investments, and empower SMEs are well underway. Reforms of state-owned enterprises under the Oman Investment Authority also continue to progress.
Oman is scaling up renewable energy production to lower electricity generation costs and support the emerging green hydrogen economy. Efforts to advance digital transformation are similarly gaining momentum.
Banking Sector Remains Resilient
Oman’s banking sector is robust, with profitability returning to pre-pandemic levels, strong capital and liquidity buffers, and solid asset quality. Serra highlighted the importance of further developing financial markets, expanding the institutional investor base, and leveraging digitalisation to enhance access to finance and support economic diversification.
The IMF team expressed gratitude to the Omani authorities for their cooperation, insightful discussions, and warm hospitality during the mission.
