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Sun 11 Oct 2009 09:24 AM

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GCC economic growth to slow to 0.7% in 2009

International Monetary Fund says rebound expected in 2010, on rising oil revenues.

Economic growth of Gulf Arab oil exporters is set to slow to 0.7 percent this year but will rebound in 2010 to grow by 5.2 percent on rising oil revenue, the International Monetary Fund said on Sunday.

Saudi Arabia and five of its neighbours in the world's biggest oil-exporting region are likely to post fiscal surpluses amounting to 5.3 percent of gross domestic product this year, compared with 27.4 percent of GDP in 2008, the IMF said.

Next year's surpluses will amount to 10.4 percent of the region's GDP.

Real GDP growth in 2009 for the Gulf - including the UAE, Kuwait, Qatar, Oman and Bahrain - would fall from an estimated 6.4 percent last year, Masood Ahmed, director of the IMF's Middle East and Central Asia Department, said in a statement.

Ahmed said the region's hefty reserves, accumulated over a six-year oil boom, had shielded it from the worst of the economic crisis that sent some of the world's largest economies into recession.

"The use of reserve buffers for countercyclical spending by oil exporters mitigated the impact on their own economies and generated positive spillovers for their neighbors," Ahmed said in the statement, referring to Gulf countries as well as other oil exporters in the Middle East.

Oil revenues are expected to rise in 2010 with higher prices and the anticipated re-emergence of global demand, the IMF said, allowing Middle East oil exporters - which also include Algeria, Iran, Iraq, Libya, Sudan and Yemen - to rebuild their international reserve positions by over $100 billion in 2010.

Crude prices tumbled from a record peak above $147 a barrel in July 2008 to just above $32 a barrel in December, before recovering to trade around $70 in August.

At its last meeting in September the Organization of the Petroleum Exporting Countries (OPEC) agreed to hold output targets steady after top exporter Saudi Arabia looked to economic strength to bolster the oil price.

Many countries in the region are keeping public spending high this year to help their economies weather the global financial crisis. Saudi Arabia, the biggest Arab economy, has committed more than $400 billion to underpin growth until 2013.

The IMF did not provide country-specific growth forecasts. (Reuters)