Oman's Economic Growth To Reach 3% In 2025-26, Says World Bank

Oman is on the brink of an economic uplift, with a forecasted average growth rate of 3% in the years 2025-2026, as per the World Bank's latest findings. The surge is attributed to the sultanate's continuous reforms and enhanced investments in sectors beyond oil.

This positive shift comes despite a forecasted dip in GDP growth for 2024, primarily due to ongoing voluntary oil output reductions by OPEC+. The World Bank, however, remains optimistic about Oman's economic trajectory, emphasizing the role of increased oil production and ongoing efforts to diversify the economy in bolstering future economic performance.

The World Bank's Gulf Economic Update reveals not just Oman's prospects but also a broader vision for the Gulf Cooperation Council (GCC) region. For the GCC, a modest growth rate of 1.6% is anticipated in 2024. Nonetheless, a robust rebound to 4.2% growth is expected during 2025-2026, with the non-oil sector leading the recovery. This projection underscores the effectiveness of the region's diversification strategies and ambitious reforms, with non-oil activities in the GCC projected to grow by 3.7%.

Inflation rates within the GCC are slated to remain relatively steady at 2.1% in 2024. This stability is supported by various measures such as subsidies, fuel price caps, and currency pegs. Nevertheless, challenges persist, particularly in the housing sector, where inflationary pressures are evident.

Additionally, the fiscal landscape is marked by rising government expenditures against the backdrop of diminishing oil revenues, although this varies across the region. Safaa el Tayeb el-Kogali, the World Bank GCC Country Director, highlighted the region's resilience amid global disruptions. El-Kogali stresses the importance of maintaining prudent economic policies to ensure sustainable growth, acknowledging the strides made in the diversification agenda.

Looking at the individual countries within the GCC, Saudi Arabia is poised for a modest GDP growth of 1.1% in 2024. This growth is primarily fueled by a 4.6% expansion in the non-oil sector, which helps mitigate the impact of a 6.1% decrease in oil GDP due to continued production cuts. The kingdom's economic growth is expected to pick up pace in 2025-2026, with an average growth rate of 4.7%, thanks to increased oil output and ongoing diversification efforts. The non-oil sector's growth is projected to stabilize at 4.5% during this period.

The UAE's economic outlook is also positive, with a predicted GDP growth of 3.3% in 2024. This growth is driven by a consistent 4.1% increase in the non-oil sector, buoyed by robust performance in tourism, real estate, construction, transport, and manufacturing sectors. The growth forecast for the UAE strengthens to 4.1% in 2025-2026, supported by a revival in oil production.

In Qatar, the economy is expected to grow by an average of 2.4% in 2024-2025, with a more significant acceleration to 4.1% in 2025-2026, largely due to an expansion in gas production. Bahrain is projected to see its economy grow to 3.5% in 2024, an improvement from the previous year, with a slight moderation to 3.3% in 2025-2026 as oil sector output rises. Kuwait faces a short-term challenge, with a projected contraction of 1% in 2024 because of extended OPEC+ production cuts. However, growth is anticipated to rebound in 2025-2026, reaching 2.6%, driven by increased oil output and a surge in infrastructure projects.

The economic landscape across Oman and the wider GCC region is marked by a mix of challenges and opportunities. While short-term growth may be subdued, particularly due to voluntary oil output reductions, the medium to long-term outlook appears brighter. Increased oil production, coupled with sustained efforts at economic diversification and structural reforms, is expected to underpin a robust recovery and sustainable growth across the region.