KUWAIT: Real GDP in Kuwait is expected to grow at 3.2% and 2.5% in 2013 and 2014 respectively, supported by stable oil production. We have revised up our forecast for real non-oil GDP in 2013 to 5% from 4%, reflecting an expected improvement in the broader business climate domestically, which is also likely to be maintained going into 2014. Meanwhile, inflation is expected to average 3-4% over the next two years. The upward revision for real nonoil GDP in 2013 is based largely on signs of a greater determination by Kuwaiti authorities to implement large infrastructure projects associated with the government’s 4-year development plan that had previously stalled.
These include projects in the transport, power and oil refining sectors. This should ease the economy’s dependence on growth in the consumer sector, which will nevertheless remain firm thanks to high employment levels and fresh government measures to support income growth. These trends will add to Kuwait’s traditional strengths of large fiscal and trade surpluses, which will provide a buffer against any fresh turbulence in the global economy. But challenges remain.
Large projects carry significant implementation risks – particularly those with more complex structures such as the public-private partnerships (PPPs). Moreover, the economy faces broader longterm challenges, most notably the need to create viable private sector jobs for new entrants to the workforce. The latter requires deep-rooted structural reforms in areas such as competition and privatization, the labor market, and education. Despite the surpluses, fiscal reform is also needed to put the budget on a stable long-term footing.
No comments:
Post a Comment