Omani Economy Sees Robust Growth in 2024Muscat, 9 Nov (ONA) — The Central
Bank of Oman (CBO) has issued the 2024 edition of its Annual Report, providing
a comprehensive assessment of the Sultanate of Oman’s macroeconomic and
financial developments during 2024, while highlighting the positive outlook for
2025.

The report reviews the domestic
economic environment, highlighting trends in real activity, inflation, fiscal
and external positions, and the performance of the banking sector. Economy
activity continued to expand in 2024, demonstrating its resilience, boosted by
stronger non-hydrocarbon sector performance. The Government advanced further on
its comprehensive reform agenda, underpinned by Oman Vision 2040.

The global economy showed notable
resilience in 2024 despite earlier concerns of a prolonged slowdown. Aggressive
monetary policy tightening in advanced economies, together with ongoing
geopolitical tensions had initially weighed on confidence. However, resilient
labour markets, lower commodity prices, and improved supply conditions allowed
major central banks to gradually shift toward more accommodative stances in the
second half of the year.

Despite these challenges, the Omani
economy delivered strong growth in 2024, driven by the Government’s reform
agenda and the continued expansion of the non-hydrocarbon sector. Inflation
remained low, supported by well-coordinated monetary and fiscal policies.
Fiscal and external balances posted surpluses in 2024, and public debt
continued its declining path. Oman’s sovereign credit rating was upgraded to
investment grade. The banking sector remained highly liquid and well
capitalized. Backed by sound macroeconomic fundamentals, the domestic
environment in 2024 provided a strong platform to advance the next phase of
structural transformation under Oman Vision 2040.

Oman’s economy performed strongly in
2024, expanding by 1.6 percent compared to 1.4 percent in 2023, supported by
higher non-hydrocarbon activity and effective policy reforms. Non-hydrocarbon
GDP grew by 3.5 percent, reflecting robust gains in manufacturing, services,
and logistics. Industrial output reversed the contraction of the previous year,
with manufacturing alone growing by 7.5 percent. Services expanded by 3.0
percent, led by wholesale and retail trade (5.3 percent) and transport and
storage (4.0 percent).

Inflation in Oman in 2024 was
markedly lower than the previous year. A strong Omani Rial, combined with
administrative and fiscal measures, helped contain inflation. The average
consumer price inflation in Oman was 0.6 percent in 2024, down from 0.9 percent
in 2023, reflecting continued declines in transport prices and moderated food
prices. Oman’s inflation remains among the lowest in the region, supported by
sound monetary and fiscal policies.

Oman’s
fiscal position continued to strengthen in 2024, maintaining a surplus driven
by favorable oil prices, prudent policy measures and improved fiscal
discipline. The government recorded a fiscal surplus of 1.3 percent of GDP, marking
steady progress towards its fiscal consolidation and intensified efforts to
achieve fiscal sustainability. These
efforts, supported by effective debt management, reduced the public debt-to-GDP
ratio to 35.0 percent in 2024, down from 37.1 percent in 2023.

The external sector remained robust
in 2024. The current account recorded a surplus of 2.9 percent of GDP,
supported by favorable oil prices, growth in non-oil exports, the government’s
rationalization of current expenditures, and attraction of various foreign
direct investments (FDI). Importantly, worker remittances remained stable in
2024, in line with the economy’s demand for foreign labour, and partly due to a
growing inclination among Omanis toward private-sector employment.

The exchange rate peg has been
instrumental in delivering low and stable inflation, serving as an appropriate
nominal anchor in light of Oman’s economic structure. Throughout 2024, the CBO maintained
its commitment to the established monetary policy framework, aimed at enhancing
the effectiveness of liquidity management operations that support domestic
economic activity, while remaining aligned with the accommodative monetary
stance of the US Federal Reserve. Amidst these developments, CBO lowered its
policy rate to reach 5.145 percent by the end of December 2024.

The banking sector continued to
align with the needs and demands of economic development, with increased
emphasis on digital transformation to improve the delivery of financial
services. In 2024, the banking system in Oman showed improved performance with
total assets of the banking sector increasing by 6.6 percent to reach RO 44.6
billion. Total credit increased to RO 32.5 billion in 2024 showing a Y-o-Y
growth of 6.7 percent compared to 4.3 in December 2023. This growth in credit
was supported by stronger deposit mobilization. Total deposits grew by 9.1
percent, reaching RO 31.7 billion in 2024 compared to their level in December 2023.

Banking profitability remained
healthy, reflecting financial resilience. Gross non-performing loans (NPLs)
remained reasonably low, at 4.5 percent as of December 2024. The capital
adequacy ratio (CAR) stood at 18.2 percent at the end of 2024 compared to 19.7
percent at the end of 2023. Liquidity conditions of banks remained comfortable,
as indicated by regulatory liquidity ratios.

In 2025, the New Banking Law (Royal
Decree No. 2/2025) modernized the regulatory framework, aligning with
international best practices and reinforcing the sector’s capacity to support
economic diversification. A key initiative introduced in 2025 requires banks to
allocate credit to priority sectors—including agriculture, fisheries, mining,
logistics, tourism, and renewable energy—thereby aligning financial
intermediation with national development priorities.

Looking ahead, Oman’s outlook
remains broadly positive despite global uncertainties. Real GDP is expected to
grow by 2.9 percent in 2025, led by non-hydrocarbon sectors. Inflation will
remain low, fiscal and external balances are projected to record small
deficits, and public debt is expected to remain sustainable at around 35.6
percent of GDP.

The conclusion of the 10th Five-Year
Development Plan in 2025 marks an important milestone in advancing Oman Vision
2040 objectives. Economic diversification, fiscal sustainability, private
sector participation, and institutional reforms have laid the groundwork for
stronger, more inclusive growth. With ongoing reforms and continued resilience
in the banking sector, Oman is well positioned to navigate global challenges
and advance its long-term development strategy.

The CBO Annual Report provides a
detailed macroeconomic analysis of Oman’s major sectors of the economy through
five Chapters namely Current Assessment and Macroeconomic Outlook (Chapter I);
Output, Employment and Prices (Chapter II); Public Finance (Chapter III);
Money, Banking and Financial Institutions (Chapter IV); and External Sector
Developments (Chapter V). The Report also presents the audited balance sheet of
the CBO and the independent auditor’s report to the Board of Directors.

— Ends/Khalid