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Wed 13 Jan 2010 01:02 AM

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Oman beats Gulf forecast on growth rates

Non OPEC member less affected than fellow exporters as it didn't join oil output cuts.

Oman's economy grew 3.7 percent in real terms in 2009, well above the expectations of the Gulf Arab country's government and analysts, while inflation slowed sharply, an economy ministry source said on Tuesday.

The global financial crisis slashed growth rates across the world's largest oil exporting region last year.

Non OPEC member Oman was less affected than fellow oil exporters because it did not have to join oil output cuts mandated by the cartel.

Speaking to Reuters, the source said: "The GDP growth of 3.7 percent in 2009 was due to higher oil prices than predicted in the 2009 budget."

Economy Minister Ahmad Mekki said in December that he expected the economy to grow by a sluggish one to two percent in 2009 after it was hit by lower oil prices in the second quarter.

Analysts polled by Reuters forecast 3.0 percent for 2009 and 4.3 percent this year, after growth of 7.6 percent in 2008.

Tim Fox, chief economist at Emirates NBD, said: "It does and doesn't surprise me ... I suspect regional growth will come in stronger than most people thought possible for 2009." Fox had forecasted a 1.5 percent growth in 2009.

Saudi Arabia's GDP growth came in at a modest 0.2 percent for 2009, while the market had expected the top Arab economy to shrink by nearly one percent.

Qatar, the world's largest natural gas producer, also surprised on the upside, with 11 percent growth in 2009, while analysts bet on an 8 percent expansion.

Oman's GDP is forecast to expand by 6.1 percent in real terms in 2010 due to higher revenues following recovery in oil prices, Mekki said earlier this month.

David Butter, regional firector Middle East and North Africa at Economist Intelligence Unit, said: "We are expecting in the next couple of years rates of growth averaging around four percent across the board (in the Gulf) with a modest recovery of economic activities."

The Sultanate of Oman based its 2009 budget at an oil price of $45 per barrel but sold at an average of $56.7 last year. Inflation decelerated to 3.6 percent in 2009, from a record peak of 12.4 percent in 2008, the source also said.

The source added: "This is due to a drop in global market prices that led to reduced demand for commodities."

The oil producer's consumer price growth was expected to stand at 3.0 percent on average in 2009 and 5.0 percent this year, the Reuters poll showed. Mekki saw inflation at 3.5 percent this year. (Reuters)

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