Oman’s economy was heavily reliant on hydrocarbons when the pandemic began, creating fiscal pressures as demand and prices fell. However, the country was able to rely on a well-capitalised and regulated financial services system to maintain macroeconomic stability, and years of sustained investment in the public health system helped it cope with the sudden demands of a medical crisis. Looking ahead, Oman’s policymakers are considering bold measures to address twin deficits, alongside efforts to accelerate economic diversification to strengthen resilience to future shocks and disperse risk across a broad range of productive sectors. The prospects for Islamic banking look bright as favourable demographics, regulatory support and a growing appetite for alternative financing should help sharia-compliant financial institutions claim greater market share in the recovery phase.
