Oman’s economy has grown by two percent in real terms so far this year and if oil prices remain above $60 a barrel, the non-Opec oil producer’s projected budget deficit will narrow, its economy minister said yesterday.
Ahmad bin Abdul-Nabi Mekki also said he was concerned that the weak US dollar, if it persists, would increase inflation, which has dropped by more than 50 percent this year.
He predicted inflation in May would be lower than the April figure.
“Economic growth so far this year has grown by two percent (compared to the same period last year),” he said in an interview after a meeting of Gulf Cooperation Council (GCC) finance ministers.
“The weakness of the dollar will fuel inflation since Oman is largely importing from abroad. However, I’m happy to say the inflation fell to 4.9 percent in April from 12 percent in December. This is excellent.”
Inflationary pressures have dropped off quickly across the oil-exporting region as oil prices fell from peaks of $147 a barrel in July and the dollar strengthened from lows it hit in 2008, easing import costs for states like Oman that peg their currencies to the dollar.
Mekki said the budget outlook for the rest of the year hinged on oil price movements, adding that Gulf oil producers look for the average oil price to stay between $60 and $75 a barrel the rest of the year.
The six-nation GCC is a loose political and economic alliance that also includes some of the world’s biggest oil exporters—Saudi Arabia, the United Arab Emirates and Kuwait.
Saudi Arabia’s king said this week that $75-80 a barrel is a fair price for oil for the time being amid signs of growing demand for the kingdom’s main revenue earner.
Most Gulf countries rely heavily on oil for their state revenues, which makes them exposed to price fluctuations and production constraints set by the Organisation of the Petroleum Exporting Countries (Opec).
Unlike fellow Gulf exporters, non-Opec Oman did not have to tighten its crude oil taps to help shore up oil prices.