Oman trade growth hopes lifted

by robust non-oil sector

Oman is making steady progress in diversifying its economy and expanding its role in global trade.

Despite oil production cuts, the Sultanate’s economy grew 1.7% in 2024, driven by a surge in non-hydrocarbon sectors such as manufacturing, logistics, tourism, and renewables. The International Monetary Fund (IMF) forecasts growth to accelerate 2.4% in 2025 and 3.7% in 2026 as oil production cuts are gradually phased out and investments in export-driven industries deepen. Inflation in the country remains low, supporting consumer stability.

Oman’s trade and fiscal positions are adjusting to a new landscape shaped by lower oil prices and shifting global demand. While the fiscal surplus is projected to narrow to 0.5% of GDP over 2025–2026, strategic investments in infrastructure, education, and health are laying the groundwork for long-term competitiveness. The government’s focus on debt reduction – central debt fell to 35.5% of GDP in 2024 – and ongoing reforms of state-owned enterprises are strengthening public finances.

Trade diversification remains central to the strategy. The current account, which posted a 2.2% surplus in 2024, may move into modest deficit in the short term, but is expected to rebound as non-oil exports scale up and energy markets stabilise.

Trade diversification is underpinned by structural reforms. That includes Oman Tax Authority making steady progress on its Tax Administration Modernization Program, refinement of liquidity management framework, and the financial development agenda proceeding with several initiatives to expand access to finance.

REGIONAL TRADE HUB

The country is also pursuing an ambitious strategy to deepen trade and investment ties with key global markets including the United States (US), Saudi Arabia, the United Arab Emirates (UAE), India, Europe, and China as part of its broader economic diversification agenda under Oman Vision 2040. The goal is to position the Sultanate as a dynamic hub for trade, logistics, and investment in the region, while reducing its reliance on hydrocarbon revenues.

Regional integration is central to Oman’s trade strategy. With Saudi Arabia and the UAE, Oman is working to enhance cross-border trade, industrial cooperation, and joint infrastructure projects. The Sultanate has prioritised investments in logistics corridors by connecting its deep-water ports in Sohar, Duqm, and Salalah to neighbouring Gulf markets.

Bilateral trade with Saudi Arabia exceeded USD 5.65 billion in 2024, reflecting the growing integration of transport, energy, and supply chains. Joint investments in petrochemicals, mining, and renewables, such as green hydrogen, are also advancing. All told, there are 1,496 Saudi-partnered companies operating in Oman. 

With the UAE, Oman is leveraging its position to facilitate Gulf-India-Europe trade routes, as part of broader connectivity initiatives. UAE investments are prominent in Omani real estate, retail, logistics, and ports. Oman continues to maintain its position as the UAE's second largest trading partner in the GCC, and non-oil trade between the two countries grew in 2024, to AED 56.2 billion (USD 15.3 billion), an increase of 9.8% compared to 2023, and up by 32.4% versus 2020.

CASTING AN EVEN WIDER TRADE NET

India is another strategic focus. Oman’s trade with India surpassed USD 7.5 billion in 2024, with strong growth in sectors such as chemicals, fertilisers, metals, and food products. The two countries are deepening cooperation in energy, especially in LNG and renewables, and exploring joint ventures in manufacturing and infrastructure.

Oman’s ports provide Indian companies with a gateway to regional and African markets, reinforcing their commercial partnership. In June, India’s minister of commerce and industry, Piyush Goyal, said the two countries are close to finalising a free trade agreement (FTA), with some “good news” expected very soon regarding the signing of the deal.

Meanwhile, China is Oman’s largest oil customer and a growing investor in downstream energy, mining, and industrial zones such as Duqm. The Sultanate is courting more Chinese investment in green hydrogen, battery materials, and manufacturing. In 2024, the trade volume between China and Oman reached USD 36.73 billion, of which China's exports amounted to USD 5.8 billion and imports totalled USD 30.93 billion, Chinese government data shows.

The US remains an important trade and investment partner for Oman. Under the 2009 Oman-US FTA, bilateral trade flows have remained robust. New US tariffs on many of its trading partners are expect to have a limited impact on Oman.

Beyond these core relationships, Oman is pursuing trade agreements and partnerships across Asia, Africa, and the broader Middle East. Its growing network of free zones and modernised ports are helping to position itself as a regional logistics hub.