Economy expands 2.4 pc in 2025, inflation remains low

The story in brief

MUSCAT, SEPT 8 The Central Bank of Oman (CBO) has issued the new edition of its Annual Report, providing a comprehensive assessment of the Sultanate of Oman’s macroeconomic and fi... MUSCAT, SEPT 8 The Central Bank of Oman (CBO) has issued the new edition of its Annual Report, providing a comprehensive assessment of the Sultanate of Oman’s macroeconomic and financial developments during 2025, while highlighting the outlook for 2026. The report reviews the domestic economic environment, highlighting trends in real activity, inflation, fiscal and external positions and the performance of the banking sector.Oman’s macroeconomic environment remained supportive in 2025, with economic activity continuing to expand at a robust pace, despite external headwinds.

Detailed summary

MUSCAT, SEPT 8 The Central Bank of Oman (CBO) has issued the new edition of its Annual Report, providing a comprehensive assessment of the Sultanate of Oman’s macroeconomic and fi... MUSCAT, SEPT 8 The Central Bank of Oman (CBO) has issued the new edition of its Annual Report, providing a comprehensive assessment of the Sultanate of Oman’s macroeconomic and financial developments during 2025, while highlighting the outlook for 2026. The report reviews the domestic economic environment, highlighting trends in real activity, inflation, fiscal and external positions and the performance of the banking sector.Oman’s macroeconomic environment remained supportive in 2025, with economic activity continuing to expand at a robust pace, despite external headwinds. This provided the Government with the necessary policy space to advance structural reforms. Investment continued to be an important driver of growth, supported by continued progress in strategic projects across both the public and private sectors. Inflation remained low, reflecting the credibility of the peg and stable domestic conditions. Fiscal and external balances recorded modest deficits, while public debt continued its declining path. The banking sector remained well-capitalised, liquid and resilient, supported by sound asset quality, prudent risk management practices and limited exposure to external shocks.Real GDP growth accelerated in 2025 to 2.4 per cent (from 1.6 per cent in 2024), supported by both the hydrocarbon and nonhydrocarbon activities. Non-hydrocarbon activities expanded by 3.1 per cent, driven by continued growth across key sectors. Agriculture and fisheries recorded the strongest growth at 10.2 per cent, reflecting ongoing efforts to strengthen food security and expand domestic production, while construction activity grew by 2.0 percent, on the back of continued investment and development projects. Services activity continued to record solid growth at 3.1 in 2025, benefitting from strong domestic demand and broad-based expansion across key service sectors. Over the medium term, economic activity is expected to strengthen further, buoyed by continued expansion across non-hydrocarbon sectors and sustained investment activity.Inflation in Oman remained low and well contained, reflecting the effectiveness of the exchange rate peg as a credible nominal anchor and the relatively limited pass-through of global price pressures into the domestic economy.

Background & context

This story sits within Oman's broader reform agenda and efforts to grow Banking as a pillar of non-oil GDP. The region benefits from supportive energy prices, expansionary government budgets, and rising interest from sovereign wealth funds and foreign investors.

Key numbers & facts

No specific figures were provided in the available source. See the original publisher for detailed numbers.

Key points

MUSCAT, SEPT 8 The Central Bank of Oman (CBO) has issued the new edition of its Annual Report, providing a comprehensive assessment of the Sultanate of Oman’s macroeconomic and fi...
MUSCAT, SEPT 8 The Central Bank of Oman (CBO) has issued the new edition of its Annual Report, providing a comprehensive assessment of the Sultanate of Oman’s macroeconomic and financial developments during 2025, while highlighting the outlook for 2026.
The report reviews the domestic economic environment, highlighting trends in real activity, inflation, fiscal and external positions and the performance of the banking sector.Oman’s macroeconomic environment remained supportive in 2025, with economic activity continuing to expand at a robust pace, despite external headwinds.

Why this matters

This matters because activity in Banking, Capital Markets shapes capital flows, hiring and investor sentiment across Oman.

Economic & market impact

Potential impact: - Banks may see shifts in mortgage, project finance and corporate lending pipelines. - Listed GCC equities and indices may see direct trading reaction.

Potentially related sectors

BankingCapital Markets

GCC angle

For the rest of the GCC, this is a signal on the pace of activity in Banking, Capital Markets. Capital flows and regulatory decisions in one Gulf state typically travel across borders given the similar economic structures and the coordination inside the GCC framework.

Risks & uncertainty

There is uncertainty around the read-through: projections can be moved by swings in oil prices, by US monetary policy tightening that most GCC central banks track via dollar pegs, and by regional geopolitical events. Headline numbers may also be revised when subsequent official data is published.

What happens next?

Watch for upcoming disclosures from listed names in Banking, Capital Markets, official macro releases for Oman, and any commentary from regulators or sovereign wealth funds. Tharwa will refresh this briefing as new public information becomes available.

Sources used

Oman Observer — Business