Oman is expected to witness a GDP growth of 4.5% in 2026. This growth is particularly influenced by strong activities in the hydrocarbon sector and a continued growth of 1.4% in non-hydrocarbon sectors.
Forecast of Inflation Rate and Fiscal Balance
The average inflation rate in 2026 is projected to be around 3%, gradually decreasing towards 2% in the medium term. Additionally, Oman's fiscal balance is expected to remain strong, with a projected average surplus of 5.3% of GDP in 2026 and 2027.
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According to a report by the International Monetary Fund (IMF) team led by Abdullah Al-Hassan, the current account balance is also expected to return to a surplus of about 6.5% of GDP in 2026 and remain positive in the medium term.
Economic Growth and Challenges
Oman's economy is entering 2026 from a strong position. Economic growth accelerated in 2025, and in the first half of 2026, it remained resilient with a 3.8% increase in real GDP alongside strong activity in the hydrocarbon sector, particularly against weaknesses in construction, manufacturing, and tourism-related activities.
In 2025, the average inflation was controlled at 1%, but from January to September 2026, it increased to about 3% (year-on-year), mainly due to rising food and transportation costs. The fiscal and external balances also remained positive, with the fiscal surplus reaching 1.9% of GDP in the first half of 2026, and the current account surplus estimated at 3.7% of GDP. Government debt is also expected to decrease to 30.4% of GDP by the end of June 2026.
Abdullah Al-Hassan emphasized that the fiscal position in 2026 appropriately mitigates the impact of the war while maintaining fiscal prudence. Any additional assistance to vulnerable households and viable companies should be temporary, targeted, transparent, and prioritize reallocation of expenditures.
Economic Outlook and Future Developments
Moreover, the increase in oil revenues should help strengthen reserves and create space for investment in resilience and diversification. In the medium term, the ongoing implementation of fiscal reforms, including improving tax management, eliminating untargeted subsidies while supporting the most vulnerable, and enhancing the efficiency of public investment, along with strengthening financial systems, will be essential to maintain fiscal sustainability and enhance policy credibility.
Al-Hassan also stated that exchange rate stabilization remains an acceptable and credible policy. The continuous implementation of monetary policy improvement projects, including operationalizing the interest rate corridor and establishing a night deposit facility in Omani rials, along with a gradual transition to a unified treasury account, will help strengthen the transmission of monetary policy and support the development of domestic money and capital markets.
He added that the banking sector remains adequately capitalized, liquid, and profitable, and given that it is expected to rapidly implement the recommendations of the 2025 Financial Sector Assessment Program, it is important that priorities include strengthening the macroprudential framework and fully operationalizing financial safety nets and crisis management arrangements.
Finally, Al-Hassan emphasized the importance of accelerating economic developments and enhancing resilience under the 2040 vision, stressing the need to prioritize the efficient allocation of economic resources, reduce government influence where private sector participation is possible, advance labor market reforms, strengthen trade integration, and enhance resilience against natural disasters.
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