Strategic Vision
A competitive economy: productive and diversified, based on innovation, integration of roles and equal opportunities, driven by the private sector, achieving comprehensive and sustainable development.
Priorities under this pillar:
- Economic Leadership and Management
- Economic Diversification and Fiscal Sustainability
- Labour Market and Employment
- The Private Sector, Investment and International Cooperation
- Development of Governorates and Sustainable Cities
Overview
The Economy and Development pillar is Vision 2040’s most complex and consequential arena. Five interlocking priorities must advance simultaneously: economic leadership must set the policy framework; diversification must create the sectors; the labour market must produce the workers; the private sector must be the driver; and governorates must develop in parallel rather than sequentially.
The pillar’s core challenge is structural: Oman remains substantially dependent on hydrocarbon revenues to fund government operations, and diversifying away from oil while oil prices remain volatile, global energy transition accelerates, and the population continues growing requires a precision of policy execution that has historically eluded Gulf states.
Priority 5: Economic Leadership and Management
Economic leadership is the enabling priority — the institutional and policy architecture within which all other economic priorities function. Without credible, capable economic institutions, no diversification strategy can succeed.
Vision 2040’s strategic direction for this priority calls for “A Dynamic Economic Leadership with Renewed Capabilities Operating within an Integrated Institutional Framework.”
2025 progress:
- Fiscal balance turned positive for third consecutive year in 2024
- Inflation remains contained at healthy 1-2% range
- Non-oil activities’ contribution to real GDP improving continuously
- Credit rating improved — Oman achieved investment-grade status from multiple agencies
- Oman Future Fund launched (OMR 2 billion) for strategic Vision 2040 investments
Priority 6: Economic Diversification and Fiscal Sustainability
This is Vision 2040’s signature priority — the pivot away from oil dependency. The targets are stark: non-oil GDP share to rise from 61% (2017) to 91.6% by 2040; oil’s share to fall from 39% to 8.4%.
Current trajectory: Non-oil GDP estimated at approximately 70.5% in 2023 — meaningful progress, but the remaining 21 percentage points require transformational sectoral development.
Sectors driving diversification:
- Tourism (target: OMR 12 billion revenue by 2040, current ~OMR 3.2 billion)
- Logistics (Sohar, Salalah, Duqm port developments; Oman Rail)
- Manufacturing (Sohar industrial zone, Duqm Refinery, green chemicals)
- Digital economy (Fourth Industrial Revolution Centre, Oman’s first satellite)
- Green hydrogen (ACME, Hyport Duqm — $30+ billion pipeline)
Fiscal sustainability: The fiscal picture has improved dramatically. Budget surplus achieved for three consecutive years; debt declining to approximately 35% of GDP from 44% baseline. This improved fiscal space is a genuine achievement of Sultan Haitham’s administration.
Priority 7: Labour Market and Employment
Oman’s labour market presents one of Vision 2040’s most politically sensitive challenges: the Omanisation drive to increase Omani nationals in private sector employment from 11.6% (2016) to 40% by 2040.
Despite decades of Omanisation policies and quotas, progress has been halting. The fundamental dynamic is that expatriate labour remains cheaper and often more experienced in specific technical roles, creating incentives for private sector employers to resist genuine Omanisation.
2025 status: Omanis estimated at approximately 18.5% of private sector jobs — well behind the trajectory needed to reach 40% by 2040.
The Tawteen Platform (launched 2024) represents the latest digital intervention, connecting job seekers directly with opportunities. The platform’s effectiveness will be a key indicator to watch.
Priority 8: The Private Sector, Investment and International Cooperation
Vision 2040 explicitly positions the private sector as the primary engine of economic growth. This represents a significant philosophical and practical departure from Oman’s historical model of government-led development.
Attracting FDI to 10% of GDP by 2040 (from a low single-digit baseline) requires creating the conditions — regulatory quality, legal predictability, infrastructure, skilled labour — that sophisticated international investors require.
2025 progress:
- Invest in Oman platform activated
- National negotiation team established for strategic investments
- Investment stimulated in green hydrogen (two new agreements 2024/2025)
- Investment and Commercial Court established (Royal Decree 35/2025)
- Corruption Perceptions Index advanced 20 places to rank 50th globally
Priority 9: Development of Governorates and Sustainable Cities
Balanced regional development addresses the historically unequal distribution of economic activity across Oman’s 11 governorates. Muscat Governorate has historically dominated — Vision 2040 targets a more distributed economic geography.
2025 progress:
- Sultan Faisal bin Turki Road Project (Diba–Lima–Khasab), 71km — 48% complete
- Al Rawdah Special Economic Zone (Al Buraimi Governorate) development
- A’Dhahirah Governorate economic zone announced
- Urban neighbourhood development programmes with complete infrastructure
The Pillar’s Core Challenge
The Economy and Development pillar must reconcile three competing pressures: the need to maintain social spending (including government employment and subsidies) that sustains political stability; the need to reform incentive structures to drive genuine private sector growth; and the need to manage the transition period during which oil revenues decline before non-oil revenues are sufficient.
This is not a technical problem. It is a political economy problem that requires sequencing reforms in a way that maintains social cohesion while delivering structural transformation. The progress made on fiscal sustainability has created space to manage this sequencing — but the private sector Omanisation challenge remains the unresolved core issue.