Overview
Oman’s economic transformation under Vision 2040 is fundamentally about shifting the GDP balance from oil to non-oil sectors. Understanding the dynamics, risks, and growth potential of each component is essential for evaluating the Sultanate’s diversification progress.
Oil GDP in Oman
Oil GDP, including crude oil and condensate production, historically accounted for 40 to 50 percent of Oman’s total output. Production averages around one million barrels per day, and revenues are highly sensitive to global price fluctuations. Enhanced oil recovery techniques, including thermal and chemical methods, are extending the productive life of mature fields. OPEC-plus commitments also influence output levels.
Non-Oil GDP in Oman
Non-oil GDP encompasses manufacturing, logistics, tourism, fisheries, mining, construction, and services. This segment has grown steadily, now contributing over 70 percent of GDP in real terms. Key growth drivers include Sohar and Duqm industrial developments, expanding tourism infrastructure, and a growing services sector. Government efforts to raise non-oil revenue through VAT and fee reforms support this transition.
Key Differences
Oil GDP is volatile and externally driven, while non-oil GDP is more stable but grows more slowly. Oil revenues still dominate government fiscal receipts despite the sector’s smaller GDP share. Non-oil sectors are more labour-intensive, creating employment opportunities for Omani nationals. The challenge is that non-oil sectors often require oil revenue investment to develop.
Verdict / Bottom Line
The transition from oil to non-oil GDP is well under way but far from complete. Oman must continue investing oil revenues into non-oil productive capacity while managing the fiscal risks of price volatility. Achieving Vision 2040’s target of 90 percent non-oil government revenue will require sustained reform and private sector growth.