2 days ago
Oman forecasts 2.2% economic growth in 2025
MUSCAT: Oman's economy is expected to grow by 2.2% in real terms by the end of 2025, up from 1.7% in 2024, according to the Ministry of Economy's 'Economic Forecasts for 2025' report, marking the final year of the Tenth Five-Year Plan.
Inflation is projected to reach around 1.3%, remaining within the plan's target range, thanks to government subsidies and stable global commodity prices. The GDP at constant prices is forecast to rise from RO 38.3 billion in 2024 to RO 39.2 billion by the end of this year, supported by a 1.3% rebound in oil activities. Oil's GDP contribution is expected to edge up to RO 12 billion, while non-oil sectors are projected to grow by 2.7%, contributing RO 28.6 billion.
Looking ahead, growth is expected to continue through 2026 and 2027, driven by strategic projects and higher oil production. However, global uncertainty persists. The IMF downgraded its 2025 global growth forecast from 3.3% to 2.8%, citing rising protectionism and demand shifts. It also trimmed growth projections for advanced economies to 1.4%, and for emerging markets to 3.7%, largely due to slowing Chinese exports, real estate pressures, and weak consumption.
Despite this, MENA's outlook remains relatively positive, with regional growth set to reach 3% in 2025, driven by recovering GCC economies and growing non-oil investments in diversification and renewables.
Trade policy changes in the US are a potential risk. Washington's planned 10% tariff on all imports, plus additional "reciprocal" duties on around 90 countries, may impact global trade flows. Although GCC states may see minimal direct impact, indirect effects such as supply chain disruptions and oil price volatility could pose challenges.
For Oman, the US remains a key trading partner, with historical data showing a US trade surplus except during 2020-2022. New global tariffs could still indirectly affect Oman through shifts in partner markets and weaker global oil demand. Rising US inflation may also delay interest rate cuts, potentially increasing imported inflation for Oman.
Nonetheless, Oman's strategic location, robust infrastructure, and free zones position it well to benefit from shifting global supply chains. Re-exports and foreign investment in economic zones could increase, especially as European firms consider relocating operations in response to tariff changes. — ONA
