Oman inflation at 3.2% in ’06 on dollar depreciation

Published: Monday, 2 July, 2007, 02:13 AM Doha Time

DUBAI: Oman’s inflation rose to 3.2% in 2006 compared with 1.9% a year earlier due to the “sustained depreciation of the US dollar” and economic growth, the central bank said in a report yesterday.
“In 2006, Oman witnessed high economic growth in relation to previous years, and the uptrend in inflation could be viewed partly as a natural offshoot of high growth,” the annual report said.
It added that the growth period coincided with a period of sustained depreciation of the US dollar and rising inflation in some of Oman’s trading partners, “both of which created additional pressures on domestic inflation in the form of higher import prices.”
The report also said Oman’s nominal gross domestic product grew for the third consecutive year and rose 15.6% in 2006.
It didn’t give a comparative figure for the year earlier.
According to the latest International Monetary Fund figures, Oman’s nominal GDP grew 24.7% in 2005 to $30.8bn.
The central bank said the country’s non-oil exports also grew 46.3%.
Oman has been witnessing an economic boom in the past couple of years, supported by rising world oil prices.
The report said the country’s government debt declined, as percentage to GDP, to 8.2% in 2006 from 16.3% in 2002.
“Healthy fiscal position of the government was a hallmark of the vastly improved macroeconomic climate of Oman in 2006,” the report said.
“The sound fiscal environment was characterized by sustained surpluses and declining debt as percentage of GDP,” among other reasons, it added.
Total assets of commercial banks in Oman registered a growth of 28.8% to reach the level of 7.251bn Omani rials at the end of December 2006, the report said.
“Sharp increase in profits has been a prominent feature of the performance of the commercial banks in recent years,” the report said.
Oman’s inflation eased in April to 4.6%, according to data from the sultanate’s Ministry of National Economy on Saturday.
Annual inflation in Oman, the second-smallest Gulf Arab economy, was 5% in March.
Kuwait broke ranks with other Gulf Arab oil producers and unshackled its dinar from the weak dollar on May 20, saying it wanted to contain the impact of rising import costs on inflation.
Oman central bank chief Hamood Sangour al-Zadjali has repeatedly said he has no plans to change the Omani rial’s peg to the dollar, although he has said rising import costs have contributed to inflation.
Money supply, measured by M2, jumped 28.3% in the year to April, according to the economy ministry. – Agencies