Gulf Arab economies will surge 35 percent this year on an oil price windfall, ING said on Thursday, drastically raising its average economic growth forecast for the six oil producers from 10 percent in February.

Top global oil exporter Saudi Arabia should witness nominal gross domestic product (GDP) growth of 30.8 percent this year, compared with 6.7 percent last year, ING said in a note. Its previous forecast for Saudi economic growth was 5.8 percent.

"We updated our forecast for the Gulf countries in light of a substantial upward revision in our oil projections," ING said, raising its estimate for 2008 oil prices to an average $119.6 a barrel from $74 a barrel.

Staggering growth in the world's biggest oil-exporting region is underpinned by a near seven-fold rise in oil prices since 2002. The average price of oil so far this year is almost $114 a barrel, compared with a 2007 average of $72.36 a barrel.

Gulf Arab governments have been investing windfall oil revenues in diversifying their economies away from oil, partly to reduce the impact of oil price fluctuations on their budgets.

In Kuwait, the world's seventh-biggest oil exporter, the economy could surge 50.6 percent this year -- the fastest rate in the region, ING said, raising its forecast from 13.1 percent.

The United Arab Emirates economy will likely swell 32.3 percent this year, compared with 16.8 percent last year, while in top LNG-exporter Qatar, where nominal GDP growth was 25 percent in 2007, GDP growth should hit 38.4 percent, ING said.

Higher oil prices -- a key factor behind the rise in global food prices -- have made imports more expensive in the Gulf, where most states peg their currencies to the ailing dollar.

Inflation in the Gulf will probably average 9.8 percent this year, ING said, raising its forecast from 6 percent in February. - Reuters