IMF Raises Oman's Projection, Oil as a Support in the Middle of the War

Logo of the International Monetary Fund (IMF). The IMF assessed that Oman's economy remained resilient amid the impact of the war in the Middle East region. (Photo: Shutterstock./Arab News)

JAKARTA - Oman's economy is still standing quite firmly in the midst of the war that has rocked the Middle East. The International Monetary Fund or IMF has raised its growth projection for Oman to 3.7 percent in 2026.

As reported by Arab News, Wednesday, June 17, the figure rose 0.2 percentage points from the IMF's April projection of 3.5 percent. The latest assessment was delivered after an IMF team visited Muscat to look at Oman's economic prospects amid the regional conflict.

Abdullah Al-Hassan, head of the IMF team in Oman, said the country's economy "continues to show resilience amid various pressures" due to the war.

According to the IMF, Oman's oil and natural gas infrastructure is largely unaffected by the conflict. This condition makes Oman able to increase oil production and exports when supplies in the region are disrupted.

"The momentum of strong growth continues, while inflation is starting to rise," Al-Hassan said, as quoted by Arab News.

The IMF noted that Oman's real gross domestic product or GDP growth rose to 2.4 percent in 2025, from 1.6 percent in 2024. Real GDP is a measure of economic growth after taking into account changes in prices.

This growth was supported by the hydrocarbon and non-hydrocarbon sectors. Hydrocarbons refer to the oil and gas sector, while non-hydrocarbons include economic activities outside oil and gas.

For 2026, Oman's economy is expected to grow by around 3.7 percent, mainly due to an increase in oil production. In 2027, growth is projected to be in the range of 3 percent.

However, there is a note that cannot be ignored: inflation is starting to rise. After an average of only 1 percent in 2025, Oman's inflation rose to 2.8 percent in the first five months of 2026. The main cause is the rise in food prices and transportation costs.

On the fiscal side, Oman's position looks stronger. The IMF estimates that the budget surplus will widen to 4.5 percent of GDP in 2026, much higher than the 0.6 percent in 2025.

Central government debt also fell to 34.7 percent of GDP by the end of 2025. Meanwhile, the current account balance, which was a deficit of 1.9 percent of GDP last year, is expected to turn into a surplus of around 3 percent of GDP in 2026 and 2027. The current account balance is a record of the inflow and outflow of money from trade and foreign transactions.

The IMF's visit to Muscat comes days after Oman's Minister of Finance Sultan bin Salim Al-Habsi met with the IMF's Executive Director for Arab and Maldivian Countries, Mohammed bin Ahmed Maait, in Washington. The two discussed strengthening technical cooperation and capacity building in the areas of finance and the economy.

Even though a number of indicators have improved, the IMF still gives a warning. Uncertainty due to the war is still high.

"With the high uncertainty due to the war, risks to the short-term outlook tend to be on the downside," the IMF said.

According to Arab News, the prolonged escalation of the conflict could put pressure on tourism, non-oil exports, and foreign direct investment. On the other hand, a quick war settlement, high oil prices, and the acceleration of reforms in Oman Vision 2040 could strengthen Oman's economic prospects.

The IMF also encourages Oman to maintain the pace of reforms. Some of the highlighted agendas are improving tax administration, strengthening the medium-term fiscal framework, transparency of state-owned enterprises, increasing women's participation in the workforce, and investment in renewable energy.