Projections of a 3 per cent growth in Oman’s gross domestic product (GDP) in 2025, as outlined in this year’s State General Budget announcements unveiled on Thursday, attest to the success of government-led measures – fiscal, regulatory and market-driven – to sustain the country’s economic rebound underway since 2022.

This projection in GDP growth at constant prices is also consistent with economic forecasts published earlier this week by the Oman Investment Authority (OIA), the sovereign wealth fund of the Sultanate of Oman.

It said: “Oman’s real GDP is expected to grow by 1.7 per cent y/y in 2024 as a whole, up from 1.3 per cent y/y in 2023. As growth in the first half currently stands at 1.9 per cent y/y, and given that oil prices have edged lower since the start of the second half, the 1.7 per cent y/y growth rate is likely to be achieved. Growth is projected to accelerate to 3.1 per cent y/y in 2025, supported by the non-petroleum sector.”

The forecast, compiled by the Authority’s Directorate of Economic and Investment Research, noted that GDP growth over 2025 is expected to be supported by monetary easing measures by the Central Bank of Oman (CBO), in alignment with the US Federal Reserve’s rate cut trajectory.

“Coupled with low inflation levels, these measures are anticipated to stimulate investments, bolster private consumption, and attract higher FDI inflows,” the Authority’s investment research unit stated.

However, it cautioned against downside risks to this buoyant outlook. Potential vulnerabilities could come in the form of declining oil prices attributable to weaker global demand, primarily from China. Also disconcerting is the likely fallout from trade tariffs threatened by the incoming US President Donald Trump.

The OIA research commentary explained: “Additionally, renewed US tariffs under Trump and rising inflation could prompt a more hawkish Federal Reserve and maintain interest rates at elevated levels. This would negatively impact the Sultanate as the CBO would maintain interest rates at elevated levels, leading to lower credit demand, reduced investments, and higher government debt costs.”

Auguring well, however, for Oman’s growth outlook is the ongoing success of the government’s “robust fiscal management efforts” over the past two years. These efforts have helped pare public debt from a peak of 67.9 per cent of GDP in 2020 to 35.0 per cent in Q1 2024.

According to the Ministry of Finance, Oman’s total public debt declined a further 5.3 per cent in 2024 to RO 14.4 billion, down from RO 15.2 billion a year earlier. As a share of GDP, public debt now stands at 34 per cent, down from 36.5 per cent at the end of 2023.

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