Oman’s Economy Grows 2.6 Percent in the First Quarter as Oil Volumes Recover but Nominal GDP Falls
Oman’s economy expanded by 2.6 percent in real terms at market prices in the first quarter of 2026, with gross domestic product at constant prices rising to 9.685 billion rials from 9.442 billion rials a year earlier, according to preliminary data from the National Centre for Statistics and Information. The same data show GDP at basic prices rising by 3.0 percent to 9.838 billion rials, which explains why some headline readings refer to 3.0 percent growth. The broader market-price measure was lower because taxes less subsidies on products moved further into negative territory, from 105.2 million rials to 152.2 million rials.
The headline hides a sharp split between real output and nominal income. At current prices, gross domestic product fell 2.0 percent to 10.293 billion rials, compared with 10.501 billion rials in the first quarter of 2025. The main drag was the price channel in hydrocarbons: petroleum activities at current prices contracted 11.7 percent, with crude oil down 12.6 percent and natural gas down 8.9 percent, even as non-oil activities at current prices rose 5.9 percent.
That divergence is the most important feature of the quarter. Oman produced more in real terms, but lower hydrocarbon pricing reduced the cash value of output. It is a familiar Gulf macro pattern: real gross domestic product can strengthen when oil and gas volumes recover, while nominal output and fiscal sensitivity remain tied to realised prices.
Oil activities led the real expansion. Hydrocarbon value added at constant prices rose 4.6 percent to 3.035 billion rials, with crude oil up 4.3 percent and natural gas up 6.0 percent. Non-oil activities grew 2.4 percent to 7.039 billion rials. In absolute real terms, petroleum activities added about 133 million rials year on year, while non-oil activities added about 162 million rials, our calculation, meaning the non-oil economy still contributed more to the activity-side increase even though oil grew faster in percentage terms.
The non-oil picture was uneven. Services, the largest non-oil bloc, rose 3.7 percent to 4.722 billion rials, supported by financial and insurance activities, which grew 9.6 percent, information and communications, up 8.3 percent, and transport and storage, up 3.1 percent. Agriculture and fishing rose 6.1 percent, helped by a 12.1 percent increase in the agriculture component. The weak spot was industry, which contracted 1.2 percent, with manufacturing down 3.1 percent and construction down 1.9 percent.
This means Oman’s first-quarter growth was not a simple oil-rebound story. The economy expanded because oil volumes improved and services stayed resilient, but diversification still showed gaps: finance, communications and agriculture expanded, while manufacturing and construction remained soft. For Vision 2040 that mix matters, because the next phase of reform depends less on headline non-oil growth and more on whether tradable and investment-linked sectors can sustain expansion.
The fiscal position stayed close to balance despite weaker nominal hydrocarbon value added. Oman’s public revenues rose 13 percent to 2.985 billion rials in the first quarter, while public spending rose 9 percent to about 3.010 billion rials, leaving a small deficit of roughly 25 million rials. Relative to first-quarter current-price gross domestic product, that deficit was only about 0.2 percent, our calculation, pointing to continued fiscal discipline and revenue resilience.
Inflation remained contained but firmer than last year. NCSI data showed average inflation of 2.3 percent in the first quarter of 2026, led by miscellaneous goods and services, transport, restaurants and hotels, and food and non-alcoholic beverages. The International Monetary Fund’s latest Article IV assessment projects full-year 2026 real growth of 3.8 percent and average consumer price inflation of 1.2 percent, so first-quarter inflation was running above the annual forecast path but still moderate by regional and global standards.
Why it matters: Oman is one of the Gulf’s clearest fiscal-repair stories, but the first-quarter data show the next challenge. The country has stabilised public finances and restored real growth, yet nominal output still fell because hydrocarbon prices weakened. For MENA investors and policymakers, the lesson is that diversification cannot be judged only by whether non-oil activity is growing; it must also be judged by whether non-oil sectors can offset oil-price swings in income, investment and fiscal space.
Outlook: Oman’s 2026 growth path depends on three variables: continued recovery in oil and gas volumes, stronger performance in manufacturing and construction, and the ability to keep the budget near balance if oil prices stay below last year’s levels. The first quarter was positive but not decisive. It showed a real economy gaining traction while the income economy remained exposed to hydrocarbons.
Sources: National Centre for Statistics and Information; Oman Ministry of Economy; Oman News Agency; International Monetary Fund.
