MUSCAT: Oman’s stronger public finances, lower debt levels and expanding non-oil economy are helping the Sultanate withstand regional instability more effectively than many Gulf economies, the World Bank Group said on Thursday, highlighting the country’s growing resilience amid ongoing geopolitical tensions.
The assessment came during a session in Muscat reviewing the World Bank’s latest Gulf Economic Update, titled “Smart Spending, Stronger Outcomes: Fiscal Policy for a Thriving GCC.”
In opening remarks, Abdullah bin Salem Al Harthy, Under-Secretary of the Ministry of Finance, said Oman continues to advance a broad economic strategy centred on diversification, fiscal sustainability and digital transformation.
He said these priorities have become key pillars in strengthening economic resilience, supporting sustainable development and improving Oman’s regional and international competitiveness.
Al Harthy said the report comes at a critical time as geopolitical developments and shifting global conditions push Gulf economies to accelerate reforms and build more diversified growth models.
He added that cooperation with international institutions, including the World Bank Group, helps support national economic policies through technical expertise, research and global best practices.
“The Oman chapter of the report highlights the country’s progress in fiscal discipline and sustainability, reflecting the government’s efforts to improve public financial management and strengthen the resilience of the national economy,” he said.
Speaking to the Observer, Wendy Werner, World Bank Group Country Manager for Oman, said the Sultanate’s economic performance should be viewed within the broader context of Gulf and global economic trends.
“Today’s report covers Oman, but puts it in the context of the region and global economic trends,” Werner said.
She said the World Bank’s work in Oman focuses on supporting the implementation of Oman Vision 2040, particularly in areas linked to diversification and sustainable growth.
“The objective of the World Bank Group here in Oman is to support the execution and deliberation of Vision 2040 and to help Oman’s growth, particularly in the areas of diversification and sustainable growth,” she said.
Werner added that the World Bank expects Oman’s growth momentum to strengthen further over the coming years, supported by declining public debt and stronger non-oil sector performance.
She cited the sustained reduction in public debt, recognised by international credit rating agencies, alongside stronger growth in non-oil sectors as key indicators supporting the country’s outlook.
“These are very positive indicators for resilient, credible and sustained higher growth,” Werner said.
Presenting the report, Hoda Youssef, the World Bank’s Lead Country Economist for the Gulf Cooperation Council (GCC) countries, said Oman’s fiscal reforms and diversification efforts have strengthened the country’s ability to absorb external shocks, helping position it among the least exposed GCC economies during periods of regional disruption.
According to the World Bank, Oman’s economy is projected to grow by 2.4 per cent in 2026, while the current account surplus is expected to reach 3.4 per cent of GDP and the fiscal surplus around 3.2 per cent.
The report said Oman’s outlook is supported by higher oil and fertiliser prices, stronger spending discipline, improved tax collection and continued reforms under Oman Vision 2040 and the Medium-Term Fiscal Plan.
“Oman is one of the few GCC countries fortunate to have alternative trade routes, meaning it is less exposed to disruptions linked to the closure of the Strait of Hormuz,” Youssef said.
The Strait of Hormuz handles around 25 per cent of global oil trade, while Qatar accounts for nearly 20 per cent of global LNG exports, underscoring the scale of economic risks linked to regional instability, she noted. The Gulf region also represents roughly one-third of global fertiliser trade, a critical component of global food production and food security.
The World Bank highlighted Oman’s fiscal consolidation programme as one of the region’s notable reform examples, citing progress in debt reduction and improved management of oil revenues.
“Oman has made substantial progress in enhancing its economic resilience and building a foundation for sustainable growth,” the report said.
The presentation noted that the GCC entered the current crisis from a relatively stable macroeconomic position, with regional growth reaching 2.6 per cent in 2025, driven mainly by non-oil sectors, while inflation remained relatively contained across most Gulf economies.
However, the World Bank cautioned that diversification across the GCC remains incomplete, with government revenues in many countries still heavily dependent on hydrocarbons.
Youssef said regional tensions continue to affect energy markets, shipping routes, tourism, aviation and logistics sectors across the Gulf.
Tourism, which contributes around 4 per cent of Oman’s GDP, is among the sectors affected by the instability, she said.
She added that higher freight and insurance costs, caused by vessels adopting longer alternative shipping routes, are increasing transportation expenses and contributing to global inflationary pressures.
Youssef also warned that rising fertiliser prices are becoming a growing concern for food-importing countries because of their impact on food security and staple commodity prices, although Oman’s position as a fertiliser exporter could provide short-term support to fiscal and external balances.
Despite the relatively favourable outlook, the World Bank said investor confidence remains one of the biggest economic risks facing the region.
Youssef said restoring foreign direct investment flows would require sustained efforts once regional tensions ease, particularly through strengthening economic resilience and maintaining policy credibility.