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RIYADH: ��������’s economic growth forecast for 2026 has been increased to 3.9 percent by the Organization for Economic Cooperation and Development — up from the 2.5 percent projected in June. 

In its latest “Economic Outlook,” the OECD said that the Kingdom’s gross domestic product will expand by 3.7 percent this year, higher than several of its G20 peers, including the US, the UK, Germany and France. 

The projection made by the organization aligns with a forecast made by the International Monetary Fund in July, which said that the Kingdom’s economy will grow by 3.6 percent this year, before accelerating to 3.9 percent in 2026. 

In its latest report, the OECD said that global economic growth is expected to decline from 3.3 percent in 2024 to 3.2 percent in 2025 and 2.9 percent in 2026. 

“Global economic growth proved more resilient than anticipated in the first half of 2025, with the world economy expanding at an annualised pace of 3.2 percent,” said OECD. 

It added: “The front-loading of goods production and trade ahead of the introduction of higher US tariff rates was an important source of support, with industrial production growth in the first half of the year exceeding the average pace of 2024 in most G20 economies.” 

Collectively, G20 nations are expected to witness an economic growth of 3.2 percent in 2025 and 2.9 percent in 2026, with India bucking the trend amid economic volatility with a GDP expansion of 6.7 percent this year, before marginally decelerating to 6.2 percent in 2026. 

The OECD added that China’s economy will grow by 4.9 percent and 4.4 percent in 2025 and 2026, respectively, while the US is expected to witness an economic growth of 1.8 percent in 2025 and 1.5 percent in 2026.

The economy of the UK is projected to expand by 1.4 percent in 2025 and 1 percent in 2026. 

The French economy is forecast to expand by 0.6 percent in 2025 before slightly accelerating to 0.9 percent in 2026, and the OECD projects Germany’s economy to advance by 0.3 percent in 2025 and 1.1 percent next year. 

The report further said that �������� is expected to maintain a healthy inflation rate of 2.2 percent in 2025 and 2 percent in 2026. 

“Inflation in most G20 economies is projected to fall as economic growth and labor markets continue to soften. Headline inflation is expected to decline from 3.4 percent in 2025 to 2.9 percent in 2026, while core inflation in advanced G20 economies remains broadly stable, easing only slightly from 2.6 percent to 2.5 percent,” said OECD. 

In June, the IMF also said that inflation in �������� is expected to remain contained, with the headline rate expected to remain 2.1 percent in 2025 and 2 percent in 2026. 

RIYADH: Oman’s Islamic finance industry is expected to exceed $40 billion between the second half of 2025 and 2026, supported by ongoing regulatory reforms and strong demand for Shariah-compliant financial services, according to Fitch Ratings.   

Despite being the smallest Islamic finance market in the Gulf Cooperation Council, Oman continues to post double-digit growth in Islamic banking and sukuk issuance.  

Fitch estimated the industry’s size at $36 billion as of end-August 2025, with Islamic banking assets comprising nearly two-thirds of the total.   

Islamic finance in the broader region continues to expand at scale. In the UAE the industry surpassed $285 billion in assets by the end of the first quarter of 2025, supported by strong demand and a deepening sukuk market, another Fitch report stated.   

In ��������, S&P Global forecasts sustainable sukuk issuance will reach between $10 billion and $12 billion in 2025, reflecting continued sovereign and corporate demand.   

Meanwhile, the Association of South East Asian Nations’s Islamic finance assets neared $950 billion by mid-2025, with projections topping $1 trillion by 2026.  

Regarding Oman, Fitch stated that “growth will be supported by regulatory reforms, Islamic banks’ product and service enhancements, expanding branch and digital banking networks, rising public awareness, and the rise of sukuk as a key funding tool.”  

Islamic banking assets stood at approximately $23.6 billion at the end of July, representing a year-on-year increase of 16.8 percent.   

This growth significantly outpaced the 5.7 percent rise recorded by conventional banks over the same period.   

Islamic banks and windows now account for about 20 percent of the total banking system assets, up from 18.1 percent at the end of the first half of 2024.  

The Islamic windows of six conventional banks held 63 percent of total Islamic banking assets in the first half of 2025, up from 40 percent in the third quarter of 2022, leveraging their parent banks' infrastructure and client base.   

The remaining assets are concentrated in two full-fledged Islamic banks. The Central Bank of Oman has introduced key structural reforms, including a regulatory framework for digital banks launched in June, and a new banking law issued in the first half of the year with dedicated provisions for Islamic banking.  

The sukuk market continues to play a pivotal role in funding, accounting for about 30 percent of total Islamic finance assets.   

It also represented 31 percent of total debt capital market issuance in the first eight months of 2025, excluding treasury bills.   

Despite a slowdown in issuance due to the government’s fiscal consolidation efforts, Oman issued its first Islamic commercial paper earlier this year.  

Fitch Ratings noted $7.25 billion in outstanding Omani sukuk as of mid-2025, all rated ‘BB+’ with a positive outlook and no defaults.  

Liquidity management in the Islamic banking sector has improved following the CBO’s rollout of new instruments that allow it to provide liquidity against Shariah-compliant securities.  

Additionally, the regulator issued a draft framework for Shariah-compliant finance and leasing operations.   

However, the sector continues to face structural limitations, including underdeveloped Islamic hedging products and limited foreign investor participation in riyal-denominated sukuk due to the lack of connections with international securities depositories.  

Beyond banking, the takaful segment reported an 18 percent market share of gross direct premiums as of end-2024, with premiums rising 19.3 percent year on year to $238.4 million.  

Meanwhile, assets under management in Islamic funds remain small, estimated at about $400 million as of August, and are expected to stay limited in the medium term.  

Fitch noted that while Oman’s Islamic finance industry remains the smallest in the Gulf Cooperation Council due to the country’s relatively late adoption and smaller economy, ongoing reforms under the government’s ‘Vision 2040’ strategy present growth opportunities.   

“Business conditions remain favourable for Omani banks – Islamic and conventional – due to still-high, albeit moderating, oil prices,” the report stated, adding that the proposed five percent income tax from 2028 is likely to have only a limited impact on banks, though Islamic banks may be slightly.