Central Bank of Oman Forecasts Real GDP Growth

Central Bank of Oman Forecasts Real GDP Growth of 4.0% in 2026 with Dual Surpluses and Debt Declining to 34.6%

The Sultanate of Oman’s macroeconomic trajectory is projected to accelerate sharply in 2026, with real gross domestic product expanding by 4.0 percent, according to the comprehensive Annual Report released by the Central Bank of Oman (CBO). The performance marks a substantial pickup from the 2.4 percent growth recorded in 2025 and 1.6 percent in 2024, underpinned by a resilient non-oil industrial base, steady hydrocarbon revenues, and sustained domestic capital expenditure. The projection confirms the structural strength of Oman’s macroeconomic framework as the nation transitions into the 11th Five-Year Development Plan (2026–2030), the second execution cycle of Oman Vision 2040.

The central bank’s assessment outlines an economy operating from a position of renewed fiscal strength and external balance. Favorable terms of trade, coupled with rigorous state budgetary discipline, are expected to generate dual surpluses across both domestic and external accounts during 2026. The national fiscal balance is forecasted to deliver a surplus of 2.5 percent of GDP, while the current account balance is projected to achieve a surplus of 4.1 percent of GDP, establishing sovereign buffers capable of insulating national development priorities from international volatility.

Sovereign Deleveraging and Controlled Domestic Inflation

A primary pillar of Oman’s macroeconomic stabilization remains the continuous reduction of sovereign debt liabilities. The CBO report confirms that public debt declined to 34.6 percent of GDP by the close of 2025, down from 35.4 percent in 2024 and significantly lower than the peak levels observed at the start of the decade. The sustained downward trajectory has enabled the Ministry of Finance to curb sovereign debt servicing costs, enhance public finance flexibility, and secure repeated credit rating upgrades back into investment-grade territory across major international rating agencies.

Domestic monetary conditions remained orderly throughout 2025, with headline consumer price inflation contained at 1.0 percent, following a modest 0.6 percent in 2024. For 2026, the central bank anticipates inflation to average 2.6 percent, a rate well within international stability thresholds. This price stability reflects the effectiveness of the Omani riyal’s fixed peg to the United States dollar as an authoritative nominal anchor, combined with well-targeted state price subsidies on essential food commodities and basic utilities.

“Oman’s macroeconomic landscape remained supportive across diverse economic sectors throughout 2025, providing the government with the necessary fiscal space to execute structural reforms while advancing strategic public and private investment programs.”

— Central Bank of Oman, Annual Report 2025

Non-Oil Production Led by Agriculture, Logistics, and Construction

Non-hydrocarbon sectors demonstrated notable dynamism, posting real growth of 3.1 percent in 2025. Agriculture and fisheries emerged as the fastest-expanding component of the domestic economy, surging by 10.2 percent year-on-year in response to strategic state investments in national food security, aquaculture ventures, and commercial fleet modernization. The services sector grew by 3.1 percent, buoyed by robust domestic consumption, tourism expansion, and heightened commercial traffic through national ports and logistics corridors. The construction sector registered 2.0 percent growth, reflecting steady execution across major infrastructure and urban housing developments.

On the external ledger, outward remittances by expatriate workers increased by 3.1 percent in 2025, mirroring expanded employment and commercial activity across local markets. While oil export receipts experienced a 15 percent drop during 2025 due to a 13 percent moderation in global crude realizations, the financial account remained resilient, bolstered by consistent foreign direct investment inflows and increased offshore asset holdings across the domestic banking system.

• 2026 Real GDP Growth Projection: 4.0%, up from 2.4% in 2025 and 1.6% in 2024.
• Fiscal Balance Projection: 2.5% surplus as a percentage of GDP in 2026.
• Current Account Projection: 4.1% surplus as a percentage of GDP in 2026.
• Public Debt to GDP: Reduced to 34.6% in 2025, compared to 35.4% in 2024.
• Inflation Trajectory: Averaged 1.0% in 2025; projected at 2.6% in 2026.
• Banking Asset Base: OMR 44.6 billion, recording 9.2% annual balance sheet expansion.

Banking Sector Solvency and Private Credit Expansion

The Sultanate’s commercial banking system demonstrated robust financial indicators throughout 2025. Total banking assets expanded by 9.2 percent to reach OMR 44.6 billion by December 2025. Consolidated bank credit grew by 8.8 percent to OMR 35.3 billion, with credit extended directly to the private sector rising by 6.8 percent, demonstrating active commercial appetite across manufacturing, services, and contracting firms. Aggregate customer deposits climbed 7.0 percent to OMR 34.0 billion, reinforcing systemic liquidity.

Financial soundness metrics confirm the banking system’s resilience. The consolidated Capital Adequacy Ratio (CAR) stood at 18.8 percent at year-end, comfortably exceeding the regulatory minimum of 13.5 percent established by the central bank. Gross non-performing loans (NPLs) remained stable at 4.4 percent, while liquidity coverage ratios remained well above regulatory baselines. Following monetary easing cycles in the United States, the CBO lowered its benchmark policy repo rate by 50 basis points to 4.25 percent by the end of December 2025, reducing borrowing costs for productive enterprises while safeguarding currency stability.

The CBO’s findings illustrate an economy advancing with disciplined momentum. By pairing structural fiscal prudence with targeted non-oil industrial expansion, Oman enters 2026 equipped with substantial sovereign buffers, institutional liquidity, and the economic latitude necessary to fund long-term Vision 2040 infrastructure and energy transition targets.

---

Source: Oman Daily Newspaper (جريدة عُمان) | Central Bank of Oman (CBO Annual Report)