World Bank: Oman Emerges as GCC’s Most Resilient Economy

World Bank has highlighted Oman as one of the most resilient economies in the Gulf, citing its fiscal discipline and diversification strategy as key buffers against ongoing geopolitical disruptions.

During its latest Gulf Economic Update presentation, economist Hoda Youssef noted that Oman has strengthened its economic fundamentals over the past few years. As a result, it now faces lower exposure to regional shocks compared to many of its Gulf peers.

Alternative trade routes reduce strategic risk

A major advantage lies in Oman’s ability to bypass chokepoints such as the Strait of Hormuz, which handles nearly 25% of global oil trade.

Instead, Oman has developed alternative logistics and shipping routes. This reduces its vulnerability to disruptions in maritime traffic. Consequently, the country is better insulated from regional conflict spillovers.

At the same time, the Gulf region remains globally significant. It accounts for roughly one-third of fertiliser trade, while Qatar supplies close to 20% of global LNG demand.

Growth outlook remains stable despite global pressures

The World Bank expects Oman’s economy to grow by 2.4% in 2026.

Moreover, the country is projected to maintain:

• A current account surplus of 3.4% of GDP
• A fiscal surplus of 3.2%

These gains are driven by higher oil and fertiliser prices. In addition, tighter fiscal policies and improved tax collection have strengthened government finances.

Fiscal discipline under Vision 2040 earns global recognition

Oman’s fiscal consolidation programme has emerged as a regional benchmark. Under Oman Vision 2040, the government has reduced debt levels and improved spending efficiency.

Importantly, authorities have managed oil revenue windfalls more effectively. This has helped stabilise public finances while supporting long-term growth.

Non-oil sectors gain momentum

The report points to steady progress in non-oil economic activity. Oman has expanded exports beyond hydrocarbons and improved its standing in the Economic Complexity Index.

As a result, the economy is gradually shifting toward higher value-added sectors. However, the World Bank cautions that diversification across the Gulf remains incomplete.

Regional risks persist despite strong fundamentals

Despite Oman’s relative strength, regional challenges continue to weigh on growth. Ongoing geopolitical tensions have disrupted:

• Shipping and logistics
• Tourism and aviation
• Supply chains across the GCC

Tourism, which contributes about 4% to Oman’s GDP, has already seen pressure due to instability.

Additionally, longer shipping routes have increased freight and insurance costs. This, in turn, has added to global inflationary pressures.

Fertiliser exports offer short-term advantage

Rising fertiliser prices pose risks for food-importing countries. However, Oman stands to benefit in the near term as a fertiliser exporter.

This advantage supports both fiscal revenues and external balances. Still, such gains remain dependent on global commodity cycles.

Investor confidence remains a key risk

The World Bank flagged investor sentiment as a critical concern. According to Youssef, restoring foreign direct investment will require consistent policy credibility and post-crisis reforms.

Therefore, governments across the GCC must prioritise:

• Financial system stability
• Liquidity support for affected sectors
• Supply chain resilience

GCC enters crisis from a position of strength

Encouragingly, the Gulf region entered the current phase with stable macroeconomic conditions. Regional growth is projected at 2.6% in 2025, largely supported by non-oil sectors. Inflation also remains contained across most economies, providing policymakers with some flexibility.