Oman's Economy Faces Decline, Recovery Expected in 2025

Oman's economy faced a 2.8 percent decline in nominal GDP due to reduced output from the hydrocarbon sector, as reported by the country's central bank. The oil sector experienced an 11.9 percent decrease in production volume in the final quarter of 2023 compared to the previous year. This trend continued into 2024, with daily oil production dropping by 5.9 percent in February. The average oil price also decreased by 2 percent to $80.2 per barrel. To stabilize the oil market, Oman, along with OPEC+ members, extended voluntary production cuts through the second quarter of 2024.

As a result of these measures, Oman's economic growth is expected to be modest at 1.4 percent in 2024. However, a positive outlook is projected for 2025 and 2026, with anticipated growth in hydrocarbon production. The non-hydrocarbon sector contributed significantly to real GDP growth, expanding by 1.3 percent. S&P Global Ratings revised Oman's outlook from stable to positive, highlighting the potential for growth in the non-hydrocarbon economy by around 2 percent in 2024.

Credit conditions in Oman remain favorable, with total outstanding credit increasing by 2.7 percent to 30.6 billion Omani rials. Credit to the private sector also rose by 3.9 percent year-on-year, reaching 25.8 billion Omani rials by the end of February 2024. This supportive credit environment is expected to aid the growth of the non-hydrocarbon sector in 2024, building on the positive momentum observed in 2023.