By Daliah Merzaban
DUBAI, Dec 21 (Reuters) - Most Gulf Arab economies will grow at their slowest pace in 2009 since the oil boom began six years ago as crude output cuts and a weak non-oil bite, a Reuters poll showed on Sunday.
Real economic growth in Saudi Arabia, the United Arab Emirates and Kuwait is seen slowing below 3 percent next year as the global recession and tight credit markets hurt activity in the region, the poll of 11 economists showed.
Economists have slashed most Gulf growth forecasts by more than half since they were last polled in July as the financial turmoil drove many major economies, including the United States, Japan and Germany, into recession.
"What this has exposed is that the region has not decoupled from the headwinds that the world economy is facing," said John Sfakianakis, chief economist at SABB bank in Riyadh, who took part in the Dec 7-21 poll.
"The Gulf is more reliant on oil export revenues than what people have perceived and how they have portrayed themselves."
Since July, oil prices collapsed about three quarters from a record above $147 a barrel, sinking to under $34 a barrel last week, as the global downturn hit oil demand, forcing OPEC to commit to slashing output by 4.2 million barrels a day.
For the world's biggest oil-exporting region, production cuts will have a severe impact on economic growth next year. The combined size of Gulf economies will slump from $1.05 trillion this year to $934.5 billion next year, the poll showed.
Real growth of 2.4 percent in Saudi Arabia would be the slowest expansion for the world's top oil exporter since 2002, median forecasts for the poll showed. For a breakdown of poll results, click on [ID:nLL758527]
The Saudi economy, set to expand 4.9 percent this year, has grown about 30 percent since 2002 -- the onset of an oil price rally that enabled the Gulf to pump windfall oil revenues into projects designed to reduce their reliance on volatile oil.
GDP growth in the UAE is seen decelerating to 2.7 percent next year from 6.8 percent in 2008, the slowest growth for the second-largest Arab economy since 2001, the poll showed.
The abrupt slowdown in the UAE would be amplified by a series of job cuts that has hit the emirate of Dubai, which is suffering from a property market correction that has battered demand in the services, retail and tourism sectors.
"The extent of the slowdown in economic activity in the non-oil sector across the Gulf will be a key element to monitor," said Giyas Gokkent, chief economist at National Bank of Abu Dhabi.
Investment spending by private firms and net exports would likely experience a slowdown as well next year but still contribute positively to GDP, Gokkent added.
PRIVATE INVESTORS PULLING OUT
Qatar, the world's top exporter of liquefied natural gas, is expected to see the fastest GDP growth next year at 9.5 percent. That is still down from growth of more than 12 percent in 2007 and 2008.
"Qatar is less exposed than other Gulf oil exporters to changes in oil prices as its increasing LNG exports are based on a variety of long-term contract prices," Samba Financial Group said in a research note this month.
The Gulf's total hydrocarbon export revenues will tumble 38.8 percent next year to $376.3 billion, after soaring 42.2 percent this year, the median of five forecasts showed.
Economic growth in Kuwait, which relies more heavily on crude exports than any other Gulf state, would fall to 2.5 percent from 5.5 percent this year, the slowest pace since 2001.
While Gulf governments seem poised to keep expanding their budgets to weather the global recession, the private sector is already pulling out of investments due to funding constraints.
Rio Tinto
The silver lining on the pessimistic regional growth outlook is that inflation, cited in the July poll as the big cloud hanging over the region's growth, is receding, economists said.
Data on Saturday showed Omani inflation fell for a second month in October to 12.6 percent. Oman's economy is forecast to expand 6.4 percent this year before growth slows to 4.2 percent in 2009, while Bahrain's GDP will advance 6 percent this year before growth falls to 3.5 percent next year, the poll showed.
(For Reuters July poll, click on [ID:nL7433025])
(Editing by Tomasz Janowski)