Oman's inflation rate is predicted to fall by up to eight percent in 2009, according to a new study.
The report by Kuwait-based Global Investment House (Global) said the decline in oil prices as well as imports of food and drink will have a "major impact in cooling inflation (in Oman) by the end of the year".
The report added: "As a result the general inflation level is expected to fall for the whole year in the range of 7-8 per cent."
Such a decline in inflationary pressures had led the Central Bank of Oman’s (CBO) monetary policies to shift from a contractionary policy aiming for controlling inflation to an expansionary policy aimed at providing more liquidity, Global added in a report cited by Times on Oman on Monday.
2008 witnessed inflation hitting double digit growth rates for the first time since 2000, standing at 12.4 percent on average for the year.
However, the Global report said signs of declining inflation could be seen for 2009. Preliminary consumer price index (CPI) data for the first four months of 2009 reported inflation at 6.1 percent, down from 11.6 percent during the same period last year.
It said CPI inflation is expected to follow a declining trend up to the end of 2009 and 2010.
The report noted that aiming for sustainability of economic growth, the policymakers have been working to reform and diversify the Omani economy through new tax laws, new privatisation laws, enhancing non-oil sectors and creating a market-friendly economic environment.
As a result, non-oil sectors played an important role in gross domestic product (GDP) growth, increasing by 27.9 percent in 2008.
The report lauded the Oman government saying that during the economic crisis it had followed prudent policies with the aim of sustaining growth and supporting its monetary and financial systems.For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
Subscribe to Arabian Business' newsletter to receive the latest breaking news and business stories in Dubai,the UAE and the GCC straight to your inbox.