Muscat: During a presentation of the World Bank’s Gulf Economic Update 2025, economist Hoda Youssef highlighted Oman as one of the least exposed Gulf economies to disruptions linked to regional conflicts and trade uncertainties.

She noted that the Strait of Hormuz handles nearly 25 per cent of global oil trade, while Qatar contributes close to 20 per cent of global LNG exports, underlining the significant risks geopolitical instability poses to the global economy. The Gulf region also accounts for roughly one-third of global fertiliser trade, making it a key player in global food security.

“Oman is one of the few GCC countries fortunate to have alternative trade routes, meaning it is less exposed to disruptions linked to the closure of the Strait of Hormuz,” Youssef said.

According to the report, Oman’s economy is expected to grow by 2.4 per cent in 2026, with the current account surplus projected at 3.4 per cent of GDP and the fiscal surplus estimated at around 3.2 per cent.

The World Bank said the outlook was being supported by higher oil and fertiliser prices, alongside government efforts to strengthen spending discipline and improve tax collection mechanisms.

The report also identified Oman’s fiscal consolidation programme as one of the region’s notable reform success stories, citing debt reduction efforts and better management of oil revenues under Oman Vision 2040 and the Medium-Term Fiscal Plan.

“Oman has made substantial progress in enhancing its economic resilience and building a foundation for sustainable growth,” the report stated.

The presentation noted that GCC economies entered the current crisis from a relatively stable macroeconomic position, with regional growth reaching 2.6 per cent in 2025, largely driven by non-oil sectors while inflation remained under control across most Gulf countries.

However, Youssef warned that geopolitical tensions had affected sectors beyond energy markets, including tourism, aviation and logistics. Tourism alone contributes around 4 per cent of Oman’s GDP and remains vulnerable to regional instability.

She added that rising freight and insurance costs due to longer shipping routes were increasing transportation expenses and contributing to global inflationary pressures.

The report also warned that higher fertiliser prices could impact food-importing nations and global food security. However, Oman’s role as a fertiliser exporter could provide short-term gains for the country’s fiscal and external balances.

Despite the relatively positive outlook, the World Bank cautioned that investor confidence remains one of the biggest economic risks facing the region. Youssef stressed that restoring foreign direct investment flows would require governments to continue strengthening economic resilience and maintaining policy credibility once the crisis eases.

The presentation further highlighted Oman’s progress in diversification, including growth in non-oil exports and improvements in the Economic Complexity Index, which measures advancement towards higher value-added production.

At the same time, the World Bank noted that diversification efforts across the GCC remain incomplete, with hydrocarbons still contributing heavily to government revenues across much of the region.