The IMF in its annual Article IV report said Kuwait’s growth has quickened in 2014 and that the Kuwaiti economy will continue to record substantial budget and balance of payments surpluses.
GDP at current prices is forecast to grow by 2.2 per cent to KD 50.7bn ($179.6bn) in 2014 but by less than 1 per cent in 2015.
The IMF forecasts that the current account surplus will fall to $67.7bn from $69.6bn in 2013. It is forecast to fall further to $64.3bn in 2015.
“A fiscal surplus of 26 per cent of GDP is projected in 2014 supported by high oil prices, but with increases in salaries and subsidies it will be down from about 35 per cent in 2013,” the IMF says. “Total spending is projected to rise by 25 per cent in 2014/15 budget, reflecting both increased current and capital expenditures.”
The IMF says Kuwait’s current near-term economic outlook is positive.
“Non-oil GDP growth in Kuwait is expected to further accelerate to 4.0 per cent in 2015, and is projected to increase to 4.5–5.0 per cent in the medium term in the baseline scenario, supported by government investment in infrastructure and oil sector, private investment, and consumption,” the IMF says. “Inflation is projected to increase to 3.5 per cent in 2015.”
The IMF says an enduring political agreement on the reform agenda is required to improve the overall business confidence and the investment climate to achieve the projected non-oil growth rates.
To see the IMF report in full, click here