Quotes: US MENA   Enter Symbol: NewsLetter: Search: advanced

Kuwait- Non-oil growth seen solid despite sluggish project implementation  Join our daily free Newsletter

MENAFN - Arab Times - 09/01/2014
No. of Ratings : 0
Add to Mixx!



(MENAFN - Arab Times) According to forecasts by the National Bank of Kuwait, non-oil growth in the Kuwaiti economy is set to reach 4.5% in 2014 and 2015, from 4% in 2013. However, overall GDP will decrease by 0.6% in 2014 due to a projected fall in oil production, before rising by 3.1% in 2015. Inflation is expected to rise from 2.6% in 2013 to 3% in 2014, and 3.5% in 2015. High oil prices, large fiscal and trade surpluses, and the government's vast financial reserves continue to provide a positive near-term backdrop for the Kuwaiti economy. Although the headline rate of economic growth will look weak in 2014, this is entirely driven by cuts in oil output; non-oil growth, while far from firing on all cylinders, is forecast to improve slightly to 4.5% thanks to better project execution and continued strength in the consumer sector



Both of these factors could disappoint, however, resulting in softer economic growth than forecast. We expect gradual progress on much-needed economic reforms to boost private investment levels and improve the economy's longer-term performance. The consumer sector remains an important growth driver, but there are signs that growth may be softening a little. Consumer credit growth has come off its peak (though remains strong), employment growth has eased, and the impact of earlier increases in wages and benefits may be fading. Early figures also suggest that take-up of debt relief under the Family Fund law implemented in 4Q 2013 has been much lower than the KD 0.8 billion in loans applicable under the scheme. The boost to disposable incomes and additional lending will therefore be smaller than initially assumed.



Following a brief cut in 1Q 2013, crude oil output rebounded to around 3.0 mbpd in mid-year, close to its full capacity. As demand weakens and non-OPEC supply continues to rise, we expect OPEC - including Kuwait - to cut output significantly in 1H 2014 in order to balance the market and keep prices close to 100 pb. Real hydrocarbon GDP is seen falling by 4% in 2014 before registering a small rise in 2015. Despite continued strength in the consumer sector, inflation remained low through 2013, averaging 2.7% in the first 10 months. This was in spite of a pick-up in housing rent pressures, which were more or less offset by decelerating inflation in the food segment. Inflation in the remaining segments - sometimes thought of as 'core' - reached just 0.7% y/y in August, its lowest for years. Some upward drift in inflation is seen in 2014, as core pressures rise and food price inflation stabilizes. But inflation should remain in the 3-4% range over the next two years.



The budget is set to record another huge surplus in FY2013/14, at 22% of GDP. This is slightly down from the 25% of GDP recorded a year earlier. Oil revenues are expected to dip slightly on softer oil prices while spending posts a small rise of 4%. Comments from senior government ministers in late 2013 about the need to control growth in subsidy payments suggest that the government will maintain tighter control of spending in future, compared to the 15% average annual increase seen over the past decade. So long as oil prices remain high, this will limit the decline in the surplus going forward. A similar moderation is likely in Kuwait's giant current account surplus, due to a combination of peaking oil receipts and rising imports. But the surplus will remain above 30% of GDP.



Kuwait: money and financ

Signs of credit growth shifting gear; stock market holds on to gains made in 1H 2013..

Liquidity

Improvements in the broader economic climate have been reflected in financial conditions. Deposit and credit growth have generally accelerated, spurred on by low interest rates, comfortable liquidity conditions, a buoyant consumer sector and better business confidence. Meanwhile, corporate profitability has improved and the stock market has held on to the advances made in 1H 2013. We expect further steady improvements in the financial climate in 2014; though acknowledge the uncertainties for global markets and liquidity related to the US Fed potentially reducing the size of its monetary stimulus early in the year (so-called "taper").





Annual growth in broad money (M2) averaged 10% in the first 10 months of 2013, up from a 7% average in 2012 and consistent with decent growth in the broader economy. Growth in the more volatile short-term measure, M1, has been much stronger - helped by the low interest rate environment. Private sector deposit growth has provided further evidence of improved economic activity, accelerating to 10% y/y in the first 10 months of 2013, up from 6% through 2012. Overall liquidity conditions would have been stronger still were it not for government deposits, which have dipped following a surge in 2012. Growth in private credit accelerated to 8% in October 2013, its fastest for more than four years. The improvement has been driven by a pick-up in lending to industry, particularly the real estate and oil sectors. Although this may partly reflect some one-off factors, we see it as supportive of our view of a pick-up in business sentiment more generally





Moreover, stronger lending growth has come despite a slight easing in consumer sector borrowing. The latter, although still very strong at 17% y/y, may soon be affected by implementation of the Family Fund law, which could see around KD 0.4 billion in household debt - 4% of the total - acquired by the government. Growth in commercial bank assets has also improved slightly, reaching 10% y/y in October, supported by stronger credit conditions. Private sector credit accounts for the majority of all bank assets. The rise in foreign assets - which had been a driving force behind bank balance sheet expansion since 2011 - abated in 1H 2013. This could suggest that banks were utilizing funds overseas in the absence of better domestic lending opportunities, which are now materializing



The Central Bank of Kuwait (CBK) has maintained its main lending rate, the discount rate, at 2.0% since October 2012. The benchmark deposit rate - the one-week repo rate - has remained at 1.5%. Banks' weighted commercial lending rates drifted 20 bps lower to 4.6% through 2013 as the impact of the CBK discount rate cut filtered through the system



Meanwhile, the Kuwaiti dinar remained more or less unchanged against the US dollar in 2013, and by extension fell by around 3% against the strengthening euro. The 7-month rally in the Kuwait stock market subsided in mid-2013, but equities managed to hold onto most of their earlier gains. Despite the leveling off, the main price-weighted KSE index was still up by 31% in the year to mid-December, while the value-weighted index was up a more modest 10%. The quieter domestic political environment, optimism on project implementation and the Syrian crisis were among the key factors affecting the market during 2013

 






  MENA News Headlines
 Aug 27 2014 - Arab BeverageJuice Industry Conference set in CairoArab News
(MENAFN - Arab News) The fourth session of Arab Beverage and Juice Industry Conference and Exhibition will be held on Sept. 2 in Cairo.The activities of the conference and exhibition will continue ...

 Aug 27 2014 - Oman Rail to begin the 1st phase of Sohar-Buraimi stretchMENAFN
(MENAFN) Under instructions from the Sultanate's government, Oman Rail Company has drawn up plans to implement the Oman National Railway project, Times of Oman reported.The plan envisions the ...

 Aug 27 2014 - The AU and the UN resolved to further strengthen their cooperation in support of ongoing efforts at development and stability in the Great Lakes RegionMENAFN Press
(MENAFN Press) NAIROBI Kenya August 27 2014/African Press Organization (APO)/ -- As part of the initial tour he is undertaking in the region Said Djinnit the Special Envoy designate of the ...

 Aug 27 2014 - Canada Concerned About Downing of UN Helicopter in South SudanMENAFN Press
(MENAFN Press) OTTAWA Canada August 27 2014/African Press Organization (APO)/ -- Foreign Affairs Minister John Baird today issued the following statement: 'Canada is concerned by reports that a UN ...

 Aug 27 2014 - Arrowstorm Entertainment Launches Kickstarter for New Fantasy EpicThe Christmas DragonMENAFN Press
(MENAFN Press) The Christmas DragonArrowstorm Entertainment offers advance DVDs and Blu-rays of upcoming film The Christmas Dragon via Kickstarter promising the world "a new Christmas classic."Salt ...

 Aug 27 2014 - Kuwait's crude oil exports to China hit 4-month highArab Times
(MENAFN - Arab Times)  BEIJING Aug 26 (KUNA): Kuwait's crude oil exports to China jumped 16.9 percent in July from a year earlier to a four-month high of 1.11 million tons equivalent to around ...

 Aug 27 2014 - Pacquiao won't 'waste time waiting' for MayweatherArab News
(MENAFN - Arab News) MACAU: Manny Pacquiao and Chris Algieri are on a two-week globe-trotting tour to promote their welterweight title fight in November but the match the world truly wants to see ...

 Aug 27 2014 - Boko Haram expands own 'caliphate' in NigeriaArab News
(MENAFN - Arab News) YAOUNDE Cameroon: Boko Haram militants have seized control of a Nigerian town after soldiers deployed there fled to take refuge across the border in nearby Cameroon police and ...

 Aug 27 2014 - Pakistan army chief PM Sharif discuss 'political situation'Arab News
(MENAFN - Arab News) ISLAMABAD: Pakistani Prime Minister Nawaz Sharif met the powerful army chief on Tuesday a source in his administration said as a political deadlock over mass protests for the ...

 Aug 27 2014 - Kuwait Energy wants to invest more in IraqMENAFN
(MENAFN) Despite unstable conditions in Iraq, Kuwait Energy announced it is very eager to invest more in the country due to its potential, Arabian Business reported.The company said that most of ...

more...


 






Google

 
 

Middle East North Africa - Financial Network

MENAFN News Market Data Countries Tools Section  
 

Middle East North Africa - Financial Network
Arabic MENAFN

Main News
News By Industry
News By Country

IPO News
Islamic Finance News
Private Equity News

How-To Guides
Technology Section

Travel Section

Search News

Market Indices
Quotes & Charts

Global Indices
Arab Indices

US Markets Details

Commodoties

Oil & Energy

Currencies Cross Rates
Currencies Updates
Currency Converter

USA Stocks
Arab Stocks
 

Algeria 
Bahrain 
Egypt 
Iraq
Jordan 
Kuwait 
Lebanon
Morocco 
Oman 
Palestine
Qatar 
Saudi Arabia 
Syria
Tunisia 
UAE 
Yemen

Weather
Investment Game
Economic Calendar
Financial Glossary

My MENAFN
Portfolio Tracker

Voting

Financial Calculators

RSS Feeds [XML]

Corporate Monitor

Events

Real Estate
Submit Your Property

Arab Research
Buy a Research

Press Releases
Submit your PR

Join Newsletters


 
© 2000 menafn.com All Rights Reserved.  Terms of Service | Privacy Policy | Contact Us | Advertise | About MENAFN | Career Opportunities | Feedback | Help