Growth expected on the heels of sharp declines felt during the crisis of 2009.
Higher oil prices and production increases will cause the Kuwait economy to grow by almost 4.4 percent this year after slower growth last year and a steep drop in 2009, according to local forecasts.
The nominal GDP of the Gulf emirate is forecasted to experience about 9 percent expansion in 2011, well below the rate of 19.2 percent reported in 2010 but much improved from the 21.2 percent contraction seen in 2009, based on a study by the Global Investment House (or GIH) of Kuwait.
Figures in the study indicated that the non-oil GDP of Kuwait was not hugely impacted by the 2009 crisis, after increasing by nearly 6 percent that year and almost 5 percent the year before.
In 2009 the oil GDP fell by 41 percent on the back of a 39 percent increase in 2008. The 2009 decrease was a result of a dive in oil prices as the worldwide financial crisis hit in September 2009.
The real GDP in Kuwait fell by 4.5 percent in 2009 reaching KD 18.9 billion, the worst of all the GCC members. These figures came after a 5.6 percent growth was recorded in 2008, according to the GIH study.
The fall of real GDP in 2009, when compared to other years, was a result of significantly declining oil prices and the emirate’s cut in production as per OPEC. Kuwait’s production went from 2.55 million barrels per day (bpd) in 2008 to only 2.26 million bpd in 2009.
Due to these changes the per capita GDP fell by 22 percent in 2009 to hit $33,718, much lower than the $43,190 recorded for the previous year. However, even after the 2009 decline, the per capita GDP in Kuwait and in terms of purchasing power parity was second only to Qatar as the highest among the GCC members.
The projections from GIH show that real GDP in Kuwait will increase by about 4.4 percent in 2011, up from the 2.3 percent recorded in 2010 and a contraction of 4.5 percent recorded in 2009. The forecasts for this year are still under the 2008 numbers of 5.6 percent growth, but equal to the figure of 4.4 percent reported for 2007.
The study forecasted that per capita GDP would climb to $40,351 for this year, up from about $36,208 reported in 2010 but still below the $43,190 reported in 2008.
Inflation was also covered in the study and is expected to fall to about 3.6 percent for 2011, down from 4.1 percent seen in 2010 and the record high reported in 2008 of 10.6 percent.
In terms of finance, the budget surplus in Kuwait moved up slightly to reach about KD 7.03 billion in the fiscal year from 2009 to 2010. Despite a drop in public revenue, that fiscal year was an improvement over the KD 6.44 billion recorded for the year before. According to the study, that increase was a result of sharp spending cuts in the 2009 to 2010 fiscal year which resulted in KD 8.09 billion in spending, down from KD 11.25 billion seen in the fiscal year previous.Paul Holdsworth, Staff Writer, Gulf Jobs Market News