MAY 7, 2024

Construction activity contributes RO 3.5 billion to Oman’s GDP

MUSCAT: The Ministry of Economy has highlighted the significant contribution of the construction sector to the country's economic growth. In 2023, the sector recorded a value of RO 3.5 billion, indicating its importance in driving the Gross Domestic Product of Oman. The Ministry emphasised that the construction sector is a key player in supporting non-oil economic activities, accounting for 12.8% of the total non-oil economic activities volume in 2023.

The total Gross Domestic Product (GDP) at constant prices for the Sultanate of Oman in 2023 amounted to about RO 38.3 billion. The construction sector accounted for 9.1% of the total GDP at constant prices and 6.6% of the GDP at current prices, which stood at RO 41.8 billion.

According to the Ministry, the construction sector is one of the largest sectors in terms of its contribution to the non-oil GDP, playing a pivotal role in diversifying the economy and reducing dependency on oil revenues. The growth of the construction sector has been supported by government spending on infrastructure projects, including airports, roads, and ports, which have aimed at enhancing the country's overall infrastructure and fostering sustainable economic growth.

One of the noteworthy aspects of the construction sector is its impact on employment. It is the largest source of job opportunities in the private sector, with over 49,000 Omanis employed in construction activities by the end of November 2023. This highlights the sector's importance in providing livelihoods and supporting the workforce in Oman.

Government investments in infrastructure projects have been instrumental in boosting the growth of the construction sector. Projects such as airports, roads, and ports have not only contributed to the sector's expansion but have also served the broader goal of enhancing the country's infrastructure. These investments have been part of Oman's broader economic diversification plans aimed at reducing dependency on oil revenues and fostering sustainable economic growth.

Furthermore, the Ministry of Economy pointed out that the recent growth in the construction sector has not only contributed to GDP expansion but has also been a significant driver of job creation in Oman. With over 49,000 Omanis employed in construction activities by the end of November 2023, the sector has emerged as the largest source of employment opportunities in the private sector, underscoring its role in supporting the local workforce.

Government initiatives aimed at enhancing the efficiency and transparency of the construction sector have been lauded by the Ministry. These initiatives include expanding the utilization of local content, restructuring the Tender Board, launching electronic tendering platforms, and developing a unified government contract system. Such efforts have been instrumental in streamlining processes, optimizing government spending, and accelerating project implementation in the construction sector.

The Ministry expected that construction activity prospects would remain favorable for growth as economic diversification efforts progress and the implementation of the 2040 urban strategy advances. This strategy paves the way for the development of modern and future cities, including the Sultan Haitham City project, which is the flagship of future cities in Oman. Agreements totaling over RO 1 billion have been signed with developers from inside and outside Oman to develop residential neighborhoods in the first phase of the city. The urban strategy includes structural plans for Greater Muscat and 14 other cities, including 3 major cities: Greater Sohar, Greater Salalah, and Greater Nizwa.

The Ministry reiterated that these modern urban trends and urban growth in Oman would attract investments and achieve further growth for companies operating in the construction sector through development opportunities in new cities and increased reliance on modern technologies in their work, thus enhancing the presence of startups and entrepreneurship institutions in this sector. — ONA