GDP In Kuwait to Climb 4.4 Percent
The real GDP in Kuwait is forecasted to jump by 4.4 percent this year as a result of rising oil prices and greater production, according to the AMF (or Arab Monetary Fund). This will also result in higher inflation and an increased surplus.
Expectations are that the nation will report an increased fiscal surplus in 2011, mainly because the government continues to restrain public spending.
An AMF study said that the real GDP in Kuwait should rise by 4.4 percent, compared to a 2 percent increase last year. Inflation is forecasted to hit 6.1 percent, up from 4.1 percent last year.
Based on government estimations, the report noted an almost 18.2 percent surge in national revenue for the 2010 – 2011 fiscal year, increased from the 2009 – 2010 fiscal year. When compared to the earnings budgeted, actual revenue surged by 115 percent.
Kuwait’s earnings from oil exports reached $66 billion or KD19.441 bn in the latest fiscal year, with expenditures coming in at $42 billion or KD12.366 bn. These figures created a $29 billion or KD8.54 bn deficit.
The report noted that the surplus is expected to drop to $17 billion or KD5 bn, after all accounts are closed and expenditures defined.
An NBK (or National Bank of Kuwait) study recently stated that the 2011 – 2012 fiscal year should see strong crude prices as well as increased outputs in the nation, one of the top OPEC producers.
Using three of the NBK’s price scenarios, they are predicting another massive surplus in the next fiscal year. Oil prices should increase by 32 to 50 percent over the previous year, resulting in much higher oil revenue.
The surplus for the 2011 – 2012 fiscal year is projected to reach a figure from 19 to 31 percent of the forecasted GDP.
Growing Fiscal Surplus in Oman
Official figures states that surging oil prices would result in a larger fiscal surplus for Oman this year, although a marked spending increase resulted from the creation of new positions and salary hikes for civil servants.
The non-OPEC nation had projected a $2.2 billion or RO850 million shortfall in the budget announced earlier in 2011.
That gap underwent massive revisions with Sultan Qaboos’ approval of substantial salary increases and job creation for government workers, resulting from the political turmoil a few months ago.
Preliminary data for last year indicated a surplus of 3.2 percent, as compared to the 2009 deficit of 3.1 percent, according to the AMF’s quarterly bulletin.
Increased oil revenue will result in surplus expansion, despite the substantial increase in public spending put in place by the Omani government in 2011.
The latest report by the Omani central bank included revisions as a result of the spending approvals in April.
The 2011 budget figures assumed a $58 average oil price and 896,000 barrels each day. Most experts forecast Omani output will surpass that target with oil prices averaging almost double the level in the budget.
A marked increase in earnings from oil exports decreased the fiscal deficit in the nation by over 92 percent, despite the spending surge.
In the opening half of 2010 the surplus originally reported by the nation shrunk into a shortfall as a result of overspending and oil revenue transfers. The 2009 surplus of $1.76 billion or RO680.3 mn fell to a deficit of almost $125.8 million or RO48.4 mn last year, dropping 92.9 percent according to the national economy ministry.
The AMF reported that a surplus balance existed before it was transferred to the reserve fund.
Forecasts indicate that real GDP will increase by about 4.4 percent, up from 4.2 percent in 2009 on the back of increased oil prices and oil production. Inflation should hit around 3.5 percent.
Growth Forecasts for the UAE Revised with Increased Economic Activity
The IIF (or Institute of International Finance) revised their GDP for the UAE to 4.4 percent, up from the previous figure of 3.8 percent.
Economic activity indicators have already reported an increase in real figures for the opening half of the year. Production of crude oil was up by 8 percent over the same time period last year. Other economic sectors, except for real estate, are reporting positive performance. These conditions have caused the IIF to revise forecasts, according to the deputy director of the African and Middle East Department, Garbis Iradian.
Increased infrastructure spending in the Northern Emirates and Abu Dhabi, along with increases in retail trade, logistics, tourism and transport in Dubai are set to support the forecasted GDP increase of almost 1 percent.
Similar to the IMF and other global groups watching the key economic data in the UAE, the IIF has suggested that certain sectors have benefited from the regional turmoil.
Tourism and hospitality have seen benefits from turmoil occurring in other areas in the region.
Dubai hotel occupancy increased to 83 percent during the opening five months of the year, up from 80 percent. In Abu Dhabi it increased to 80 percent, from 75 percent. Occupancy in Cairo, Bahrain, Beirut and Damascus fell markedly.
If Brent crude reaches the forecasted rate of $115 per barrel (Dh422), projections push the fiscal balance to be a 7 percent surplus, although there is an expected increase in government spending.
The CDS (or credit default swap) in Dubai narrowed to 329 basis points in July, the lowest rate recorded since last November when the debt rescheduling was in the works for Dubai World.
Inflation is forecasted to remain below 2 percent, despite the increased economic activity, according to the IIF. The 12-month inflation rate was reported to be 1.4 percent in May 2011.Paul Holdsworth, Staff Writer, Gulf Jobs Market News