Kuwait’s economy is likely to grow 3.8 per cent in 2012, supported by a steady consumer sector which is poised to perform well this year, according to a report by National Bank of Kuwait (NBK).
The country’s consumer price index (CPI) inflation will remain relatively moderate at 4 per cent, the NBK noted in its latest GCC Brief.
‘We expect oil prices to remain relatively supported thanks to very moderate world growth (but escaping a recession), as well as tight supply conditions though Libyan oil should be coming back gradually,’ said the report.
‘The consumer sector has been, and should remain, steady as witnessed by strong levels of confidence, loan growth, and salary/spending growth in 2011. We expect the same factors to be supportive in 2012,’ the report stated.
‘The rest of the economy (construction, business services etc) showed signs of stirring late in 2011 and should improve somewhat in 2012, but will be very sensitive to the momentum, or lack thereof, of the government’s current development plan,’ it added.
Kuwait plans to spend KD5.4 billion ($19.3 billion) in the current fiscal year 2011/12 ending in March, said the NBK in its GCC Brief.
‘We expect a higher spending (or execution) pace of 70-75 per cent for 2012 though recent early signs are not very encouraging and we could still end up near 60 per cent,’ the report added.
Consumer price inflation stood at 4.8 per cent in 2011, pressured by higher international food prices. We expect inflation to ease back to 4 per cent in 2012 as the pass through of higher global food prices wanes.
According to NBK report, Kuwait’s fiscal position remained enviable with the country posting its 12th consecutive surplus in fiscal year 2010/11 at KD5.3 billion (21 per cent of GDP).
Another, larger surplus is expected for the fiscal year 2011/12, at KD9 billion or higher, the report added.