Oman’s economy is expected to grow by 4.5% in 2026, the International Monetary Fund has forecast, raising its assessment as stronger oil and gas production offsets weakness in several non-oil industries.The projection, issued after an IMF mission concluded consultations in Muscat on 8 November, exceeds the Fund’s October estimate of 4.1%. It follows growth of 3.8% in the first half of this year and reflects the resilience of Oman’s energy infrastructure and logistics operations despite the Middle East conflict.
The IMF expects non-hydrocarbon output to expand by 1.4% during 2026, indicating that petroleum production will account for much of the acceleration. Its assessment also identifies weaker construction, manufacturing and tourism-related activity as constraints on economic performance.
Abdullah AlHassan, who led the IMF staff mission, said the economy had entered the year from a position of strength, supported by sound fundamentals and prudent policies. The team conducted its Article IV consultation discussions with Omani authorities between 25 October and 8 November.
The Fund expects average inflation to reach 3% this year, compared with 1% in 2025, before gradually easing towards 2% over the medium term. Consumer price increases had already reached approximately 3% year on year during January to September, primarily reflecting higher food and transport costs.
Oman’s public finances are expected to remain in surplus, with the IMF forecasting an average fiscal surplus equivalent to 5.3% of gross domestic product across 2026 and 2027. The current account surplus is projected at approximately 6.5% of GDP this year, with positive balances expected to continue over the medium term.
During the first six months of 2026, the government recorded a fiscal surplus of 1.9% of GDP, while the current account surplus was estimated at 3.7%. Government debt fell to 30.4% of GDP by the end of June, providing capacity to withstand external shocks. These figures underline the importance of preserving reserves as regional instability continues to affect trade and household purchasing power.
The IMF said the government’s fiscal approach had helped cushion the economic impact of the regional war without abandoning budget discipline. It recommended that any additional assistance to vulnerable households and viable businesses should be temporary, targeted and transparent, with spending priorities adjusted to accommodate the measures.
Higher oil revenues should be used partly to rebuild financial buffers, the mission said, while preserving resources for investments that strengthen economic resilience and diversification. It also called for improvements in tax administration, greater efficiency in public investment and the gradual removal of untargeted subsidies, accompanied by protection for vulnerable groups.
The Fund’s assessment comes against a difficult regional backdrop, with uncertainty over shipping, energy markets and supply chains affecting economic activity across the Gulf. Oman’s comparatively limited disruption to energy facilities and continued logistics activity have helped sustain output, although higher import and transportation costs are feeding through to consumer prices.
The IMF described the Omani banking system as well capitalised, liquid and profitable, with limited direct exposure to industries most affected by the conflict. Nevertheless, it urged authorities to strengthen safeguards against financial instability and improve arrangements for managing banking crises.
Those priorities include implementing recommendations from the 2025 Financial Sector Assessment Program, reinforcing the macroprudential framework and making financial safety nets fully operational. The mission also supported continued work to deepen domestic money and capital markets.
On monetary policy, the Fund reaffirmed its support for the Omani rial’s exchange-rate peg, describing it as a credible anchor. It encouraged further implementation of the Monetary Policy Enhancement Project, including the development of an interest-rate corridor and an overnight standing deposit facility for banks.
The IMF also recommended progress towards a comprehensive treasury single account, a measure intended to improve public cash management and support the transmission of monetary policy. Its reform priorities include reducing the state’s role where private investment is viable, improving resource allocation and advancing labour-market changes.
Under Oman Vision 2040, authorities are seeking to expand private-sector participation and reduce dependence on hydrocarbons. The mission identified stronger trade integration and improved preparedness for natural disasters among additional priorities for maintaining economic stability.
The consultations involved discussions of fiscal and monetary policy, financial sector performance and structural reform, alongside the outlook for economic activity and inflation. The IMF team thanked Omani authorities and other participants for their cooperation at the end of the Muscat visit.
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