NBK forecasts flat Kuwait growth in 2014-15

Kuwait’s GDP will be barely changed this year and should expand by 1 per cent in 2015, the latest National Bank of Kuwait (NBK) economic report shows (see table below).

GDP at current prices will be KD 50bn in 2014 and KD 52.2bn in 2015 reflecting flat demand for Kuwait oil exports and lower oil prices. The government is nevertheless expected to record further large budget surpluses.

Real GDP, a measure of economic activity that excludes price changes, will grow by less than 1 per cent this year before expanding by 3 per cent on increased non-oil activity in 2015.

NBK said:

  • Non-oil growth should be 4-5 per cent in 2014 and 2015. Project activity is expected to strengthen.
  • Cuts in oil production are seen in 2014 but oil revenues will remain buoyant and support further giant fiscal and trade surpluses.
  • Government spending is expected to continue to rise, but more slowly than in the past, and with a greater emphasis on capital spending.
  • Inflation is expected to edge higher to 3.5 per cent in 2014.
  • Monetary policy will remain accommodative. Credit growth is expected to increase as business lending accelerates.
  • The stock market is attracting increased interest.

“Over the medium-term, we believe that policy should focus on two main areas: the issue of fiscal sustainability, perhaps through the use of medium-term fiscal targets; and the implementation of broader reforms in order to improve the economy’s long-term growth potential,” the report said.

2012 2013 2014F 2015F
GDP KD bn 51.30 50.50 50.00 52.20
Real GDP % change 8.30 0.30 0.60 3.00
CPI % change 2.90 2.70 3.50 3.50

Source: National Bank of Kuwait, 10 April 2014

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