MUSCAT: Oman’s broad money supply (M2) showed a significant growth of 8.1% year-on-year, reaching a total of RO 24.9 billion by December 2024. This marks a notable increase, reflecting the continued expansion of the country’s financial system. The growth in M2, which includes currency in circulation and various types of deposits, signals a positive shift in Oman’s economic environment. This rise indicates that liquidity in the market has increased, which can be an essential factor for economic development and investment activities.
The rise in broad money supply is closely tied to several economic factors, including increased public and private sector spending, growth in bank deposits, and the government’s fiscal policies. The Omani banking sector has been resilient, adapting well to the evolving economic conditions. The surge in M2 suggests that more people and businesses are holding liquid assets, which may be an indicator of optimism about the economic prospects for the country. This growth could also imply that the financial system is functioning effectively, with banks playing a critical role in facilitating economic activity.
Furthermore, the increase in M2 can have a range of effects on inflation and interest rates. A higher money supply, if not managed carefully, can potentially lead to inflationary pressures. However, if the growth is accompanied by a corresponding increase in the production of goods and services, the risks of inflation could be mitigated. Oman’s central bank will likely continue to monitor these trends closely to ensure that the expansion of the money supply does not outpace economic growth, which could lead to an overheated economy.
In the context of Oman’s broader economic strategy, this growth in the money supply aligns with efforts to stimulate domestic economic activities, including investment in infrastructure and diversification of the economy. As Oman transitions toward a more diversified economy under its Vision 2040, the expansion of M2 is seen as an encouraging indicator of economic health. It reflects a stronger financial foundation, potentially supporting private sector growth and contributing to the broader goals of fiscal stability and development.
