Kuwait’s central bank expects the country’s economic growth to slow dramatically this year as it predicts a contraction in the contribution of the oil sector, as the crude exporter trims output. The central bank forecasts real economic growth of 1.9 per cent this year, compared with 6.3 per cent in 2012 and 8.2 per cent the year earlier. That is below the forecasts of both Citigroup and National Bank of Kuwait but in line with International Monetary Fund estimates. Kuwait’s economy has suffered as political wrangling and government bureaucracy have delayed key infrastructure projects and reforms.
Despite its oil riches, the country – which has an elected parliament with powers to question the prime minister – has struggled to kick-start the economy. “These are testing times for financial institutions across the globe,” Mohammad Al-Hashel, the central bank governor, said. “The banking sector in Kuwait is continuously developing its operations and activities in order to meet the challenges that followed the economic and financial crisis in 2008.” Banks are facing slower economic growth in Kuwait as oil GDP is set to decline in the Gulf monarchy, which saw some of the largest protests in its history last year. In line with the IMF, the central bank predicts that oil GDP will shrink 3.4 per cent in 2013 compared with growth of 8.4 per cent in 2012. Importantly, the contraction is attributed to a tapering of oil output as opposed to a price decline, the central bank confirmed. “In terms of the deceleration in the headline growth rate – it’s an oil story,” says Daniel Kaye, head of macroeconomic research at the National Bank of Kuwait. Gulf countries including Kuwait may take the opportunity to trim their output in light of historically high production, he adds.
Read more: http://news.kuwaittimes.net/2013/03/20/kuwait-warns-of-sharp-slowdown-in-growth/
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