Muscat – Oman’s economic growth is expected to accelerate to 4% in 2026 from 2.4% last year, supported by continued expansion in both hydrocarbon and non-hydrocarbon activities, the Central Bank of Oman (CBO) said.

The central bank said the outlook remained broadly positive despite continued global uncertainties, with stronger hydrocarbon revenues, non-oil growth and investment activity expected to support the economy this year.

‘Oman’s outlook remains broadly positive despite global uncertainties. Real GDP is projected to accelerate to 4.0% in 2026, supported by both hydrocarbon and non-hydrocarbon sectors,’ the CBO said in its Annual Report 2025, issued on Tuesday.

The central bank also expects Oman to maintain macroeconomic stability, with average inflation projected at 2.6% in 2026. It said the country was expected to record sizeable fiscal and current account surpluses, supported by favourable oil prices, continued fiscal discipline and ongoing structural reforms.

The fiscal balance is projected to post a surplus of about 2.5% of GDP, while the current account surplus is expected to reach around 4.1% of GDP, underpinned by stronger hydrocarbon revenues and robust growth in non-hydrocarbon exports, the CBO said.

The outlook comes as Oman continues to push ahead with economic diversification under Oman Vision 2040 and the 11th Five-Year Development Plan (2026-2030).

The CBO said continued implementation of the reform agenda would be essential to building a more diversified and competitive economy and strengthening medium-term growth prospects.

The central bank also noted that Oman’s economy performed strongly in 2025 despite external headwinds. Real GDP growth accelerated to 2.4% from 1.6% in 2024, with both hydrocarbon and non-hydrocarbon activities contributing to the expansion.

Non-hydrocarbon activities grew by 3.1% in 2025, driven by continued expansion across key sectors, while investment remained an important engine of growth. The CBO said progress on strategic projects across the public and private sectors continued to support economic activity.

‘Over the medium term, economic activity is expected to strengthen further, buoyed by continued expansion across non-hydrocarbon sectors and sustained investment activity,’ it said.

Despite lower oil prices, Oman’s fiscal position remained resilient in 2025, with the government successfully implementing the state budget while balancing fiscal sustainability with continued investment in growth-enhancing initiatives.

The fiscal balance recorded a modest deficit of 1.1% of GDP in 2025. Public debt, meanwhile, continued to decline, with the debt-to-GDP ratio falling to 34.6% from 35.4% in 2024.

The CBO said continued fiscal consolidation and stronger macroeconomic fundamentals had improved Oman’s sovereign credit profile and contributed to the restoration of investment-grade status.

The banking sector also remained well capitalised, liquid and resilient, supported by sound asset quality, prudent risk management and limited exposure to external shocks, according to the central bank.

On monetary policy, the CBO said Oman’s exchange rate peg continued to serve as an appropriate nominal anchor, given the structure of the economy, while supporting investor confidence and foreign direct investment.

Domestic monetary conditions remained closely aligned with developments in US monetary policy because of the currency peg. In line with the easing cycle in US monetary policy and the requirements of the peg, the CBO lowered its policy rate to 4.25% by the end of December 2025.