Mubasher: National Bank of Kuwait (NBK) expected the Kuwaiti economy to grow at 1.8% in 2020, citing resilient growth of the non-oil sector, and the sound economic fundamentals of the Gulf country, the lender said in a report.
Even with oil production restraints announced by members the Organization of the Petroleum Exporting Countries (OPEC), including Kuwait, and their allies, the non-oil sector’s growth is set to hover around the 2019 level of 2.5% in the period between 2020 and 2022, according to the NBK’s report received by Mubasher on Wednesday.
Nevertheless, falling oil prices have weighed on Kuwait’s budget balance, coupled with the continuously declining amount of assets in the general reserves, amid a lack of economic reform measures or the passing of a new public debt bill.
Oil production levels are set to reach the limits established under OPEC agreement, and gradually rise over the coming years.
However, the growth of oil sector would exceed that of its non-oil counterpart in 2021 and 2022, pushing overall GDP beyond 3%, compared with 1.8% in 2020, as oil gross domestic product (GDP) would still be supported by the growing Jurassic gas output as well as the increase of the production of refined products.
On a side note, while Kuwait’s ranking in the ease of doing business jumped, the NBK highlighted the need to further improve business conditions and promote global competitiveness.
Mounting financial pressures, along with the five-year plan, would prompt Kuwait to implement growth-boosting reform measures, most specifically after the parliamentary elections to be held in the fourth quarter of 2020.
While Kuwait’s growth levels are notably improving, such rates is set to persist in the medium term, yet the slow implementation of reforms remained a concern.
On the inflationary front, the NBK expected the inflation rate to fall to the range from 1.5% to 2% between 2020 and 2022, after reaching 1.1% this year.
