Oman is latest Gulf state to beat GDP forecast

Oman's economy grew 3.7 per cent 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. "The GDP growth of 3.7 percent in 2009 was due to higher oil prices than predicted in the 2009 budget," the source told Reuters.

Economy Minister Ahmad Mekki said in December that he expected the economy to grow by a sluggish 1-2 per cent in 2009 after it was hit by lower oil prices in the second quarter.

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

"It does and doesn't surprise me ... I suspect regional growth will come in stronger than most people thought possible for 2009," said Tim Fox, chief economist at Emirates NBD, who forecast 1.5 per cent growth in 2009.

Saudi Arabia's GDP growth came in at a modest 0.2 per cent 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 per cent growth in 2009, while analysts bet on an 8 per cent expansion.

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

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

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 per cent in 2009, from a record peak of 12.4 per cent in 2008, the source also said.

"This is due to a drop in global market prices that led to reduced demand for commodities," the source said.

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