Muscat – The construction industry – the largest employer in the private sector – is witnessing significant growth, contributing RO3.5bn to the sultanate’s gross domestic product (GDP) in 2023. The country’s real GDP was RO38.2bn last year.

The Ministry of Economy reported construction activities grew 1.2% and 2% in 2022 and 2023, respectively, indicating a positive development in efforts to bolster the growth of non-oil activities. Non-oil activities grew 2.4% in 2023.

The ministry confirmed that construction is one of the largest sectors in terms of contribution to non-oil GDP, accounting for 12.8%  of the total volume of non-oil activities in 2023 which was worth RO27.3bn.

The current growth in construction activities also enhances the sector’s role in providing job opportunities. As of November-end 2023, over 49,000 Omanis were employed in the construction sector, out of a total of more than 274,000 insured Omanis in the private sector.

Growth in construction activities in the past decade was supported by substantial government spending on infrastructure projects, including airports, roads and ports. However, the sector faced challenges after oil prices declined in 2015 and was further affected by the COVID-19 pandemic. Pandemic-related precautionary measures caused the sector’s contribution to the GDP to fall from RO3.8bn in 2020 to RO3.4bn in 2021, a 10.7% decline.

The Ministry of Economy attributed the sector’s resurgence to positive economic and financial developments in Oman. ‘Favourable economic conditions, disciplined expansion in public spending and financial stability have strengthened development spending in line with economic priorities.’ The progress of economic diversification plans in the 10th Five-Year Plan has also supported the sector’s growth.

The sector is benefiting from ongoing decentralisation efforts, the Governorates Development Programme,  and support for infrastructure and services in all regions, including road projects currently underway. ‘The sector is further aided by growth of main economic diversification sectors, especially tourism, transportation and logistics.’

Looking ahead, the Ministry of Economy expects further growth in the construction sector, driven by economic diversification efforts and implementation of the Urban Strategy 2040, which aims to develop modern and future cities, including Sultan Haitham City, considered Oman’s first future city. Agreements worth over RO1bn have been signed with developers to establish residential neighbourhoods in the first phase of the city.

Urban Strategy 2040 encompasses structural plans for Greater Muscat and 14 other cities, including Greater Sohar, Greater Salalah and Greater Nizwa.