(MENAFN- Gulf Times) Kuwait isn't letting a 50% slump in oil over the past 12 months get in the way of driving loan growth to the fastest pace in six years.
Credit expansion may surpass 8% in 2015, topping the 7% rate last year, fuelled by consumer spending and government infrastructure projects, according to National Bank of Kuwait, the country's largest lender. Kuwait City-based Global Investment House forecasts growth of as much as 8%.
"We're ready to revise our loan-growth expectations upward once we see more activity in terms of infrastructure development," Naveed Ahmed, a banking analyst at Global Investment, said on February 3 by phone.
Opec's third-biggest producer plans to invest about $22bn in more than 500 projects, most of which have been in the works since 2010. Personal income is on the rise as more Kuwaitis are being hired in the private and public industries and women join the workforce, Nemr Kanafani, a senior economist at National Bank of Kuwait, said by phone on February 4.
The Gulf country, which depends on crude for about 90% of its revenue, said last month it's sticking to plans for building an oil refinery and an airport terminal as part of its infrastructure-led development plan. The government forecast a deficit of 7bn dinars ($24bn) for the next fiscal year, the highest shortfall projection since 2012-2013.
"Very little of the development plan has been implemented," Jassim al-Sardou, head of Al-Shall Economic Consultants, said by phone on February 3. "So much money was allocated to these projects, and look how little has been contracted."
The government, which has faced criticism for failing to kick start projects, acknowledged the implementation rate of the investment program had been poor. It has prepared a new five-year plan it described as being "closer to reality" which has been approved by parliament's finance and economic committee. The programme envisages projects worth 34bn dinars over the next five fiscal years.
Consumer lending accounted for 61% of total loans in the year to November, central bank data show. Credit facilities to residents recorded an increase of 5.9% in the period. The proportion of the female population in the Kuwaiti labour market jumped to an average 44% in 2013 from 35% in 1990, according to World Bank data.
The two things that are driving non-oil growth are "project spending and the consumer sector, it's been strong and remained strong," Kanafani said. "What is really accelerating is the government spending on projects."
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