Muscat: The Ministry of Economy’s latest projections reveal a promising economic outlook for Oman in 2025. Real GDP at constant prices is expected to rise from RO 38.3 billion in 2024 to RO 39.2 billion by the end of this year, driven by a rebound in oil activity and stable non-oil sector growth.

Oil activities are forecast to grow by 1.3% in 2025, reversing a 3% decline from 2024, with their contribution to GDP increasing slightly from RO 11.9 billion to nearly RO 12 billion. Meanwhile, non-oil sectors are expected to contribute RO 28.6 billion to the GDP—up from RO 27.9 billion in 2024—despite a slight deceleration in growth rate to 2.7%, compared to 3.9% last year.

The inflation rate is projected to rise modestly from 0.6% in 2024 to 1.3% in 2025, remaining within the target range of the tenth five-year plan. This stability is supported by ongoing government subsidies on basic goods and expectations of relatively stable global commodity prices.

Looking ahead, the Economic Modeling and Forecasting Team anticipates continued momentum in economic growth through 2026 and 2027, fueled by strategic non-oil sector projects and rising oil production.

Globally, the International Monetary Fund (IMF) has downgraded its 2025 global growth forecast from 3.3% (January) to 2.8% (April), citing policy shifts, trade disruptions, and rising uncertainties. Advanced economies are expected to slow to 1.4%, led by tempered expectations for the U.S. economy. Developing and emerging markets face a drop in growth from 4.3% in 2024 to 3.7% in 2025—largely driven by challenges in China’s export, real estate, and consumption sectors.

Despite global headwinds, the MENA region, including the GCC, is expected to outperform other economic groups, with growth projected at 3% in 2025, up from 2.4% in 2024. This is attributed to rising oil output and robust non-oil investments across Gulf countries.

The report warns of the potential indirect impact of new U.S. tariff policies. With a 10% base tariff on imports and additional “reciprocal tariffs” affecting about 90 countries, global trade disruptions could lead to slower growth, fluctuating oil prices, and inflationary pressures—potentially impacting Oman’s trade partners and imported inflation.

However, Oman’s own exposure to these tariffs is expected to be limited. The Sultanate remains a competitive global trade hub, thanks to its strategic location, free zones, and modern infrastructure. Oman’s positioning allows it to attract investments and expand re-exports, especially as companies rethink global supply chains and seek new hubs.

Trade data from 2014 to 2024 shows Oman’s balance with the U.S. generally favors the American economy, though Oman posted trade surpluses in 2020–2022.