Kuwait Business Forecast Report Q3 2009

Publication Date	June 2009
Publisher	Business Monitor
Product Type	Report
Pages	58
ISBN Number	1745-0624
Product Code	BMI03958

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Summary

As we go to press, the outlook for the global economy is certainly brighter than it was at the time of our last Kuwait Business Forecast Report: markets are picking up and sentiment seems to be turning towards cautious optimism. For Kuwait, this positive mood is amplified by the election of what appears to be a parliament more amenable to reform. However, the bad times are not over.

The economy will still contract this year, further jobs will be lost, and there is still the possibility of a double-dip recession.

On the political front, things are looking up. We remain cautious; the 'rebel' MPs who have been the cause of the turmoil over recent years have been re-elected, and could easily resurrect their tactic of demanding to question the prime minister and other cabinet members once the honeymoon period is over. That said, the results do seem to suggest a desire for an end to the political stagnation that has characterised the last few years. Any successful attempts to introduce economic or business environment reforms would be a positive indicator.

Economically, our slightly higher oil price forecast this time around - we now see the OPEC Basket averaging US$45.50/bbl in 2009 - has improved the outlook slightly, although at a cost. The higher prices reflect improved global sentiment, but also the stringent production cuts implemented by OPEC: our oil and gas team has revised down its forecasts for Kuwaiti output and exports. Consumer spending, gross fixed capital formation, exports and imports will all contract in real terms this year, and further financial-sector turmoil could mean an even worse decline than the -1.0% we are currently projecting.

As far as the Kuwaiti business environment is concerned, we think that it remains one of the least attractive in the Gulf, thanks to the government's inability to pass investment-friendly reforms. However, this may be about to change, thanks to the election of the new parliament, and there are still good opportunities for investors. As with the other Gulf states, the low tax regime is a major draw, and infrastructure has also improved substantially over recent years. In a like-for-like opportunity, though, Kuwait would be likely to lose out to Saudi Arabia, where the business environment goes from strength to strength and the government implements reforms unimpeded by elected representatives.

Content

Executive Summary
- A New Dawn?
Chapter 1: Political Outlook
- SWOT Analysis
- BMI Political Risk Ratings
- Domestic Politics
- A Vote for Change? Election Results Analysed
- The new parliament may just offer a path of compromise between Kuwait's opposition MPs - many of whom won back their seats - and the reform-minded government
Chapter 2: Economic Outlook
- SWOT Analysis
- BMI Economic Risk Ratings
- Economic Activity
- Financial Sector Threats Loom But Forecasts Unchanged
- The outlook is gloomy for 2009, but a recovery should materialise in 2010
- Balance Of Payments
- Still In Surplus, But Times-A Changing
- The current account surplus is not under any threat, even with our relatively low oil price forecasts
- Monetary Policy
- Liquidity Picking Up But Rates Cuts To Continue
- The price environment will stabilise, with last year's inflation a thing of the past, allowing the authorities to reduce interest rates this year and next
Chapter 3: 10-Year Forecast
- The Kuwaiti Economy To 2018
- Long-Term Forecasts: A Closer Look
- Kuwait faces substantial structural challenges over the long term, but the energy sector will continue to grow in real terms to 2018, keeping the budget in surplus
Chapter 4: Special Report
- The Outlook For Global Banking
- Business Environment Rating Outlook
Chapter 5: Business Environment
- SWOT Analysis
- BMI Business Environment Risk Ratings
- Business Environment Outlook
- Institutions
- Infrastructure
- Market Orientation
- Operational Risk
Chapter 6: Key Sectors
- Retail
- Executive Summary
- BMI expects Kuwait's retail sector to undergo significant growth, due to the prosperity in the country and its resources and infrastructure
- Consumer Electronics
- Executive Summary
- Growth in Kuwait's market for digital devices is set to be driven by a steadily growing economy
Chapter 7: BMI Global Assumptions
- Global Assumptions
List of Tables
- Table: Political Overv iew
- Table: ECONOMIC ACTIVITY
- Table: BALANCE OF PAYMENTS
- Table: MONETA RY POLICY
- Table: LONG-TERM MACROECONOMIC FORECASTS
- Table: LOAN-TO-DEPOSIT RATI OS, Selected States
- Table: LOAN GROWT H (% CHG Y-O-Y), Selected States
- Table: COMMERCIAL BANKING BUSINESS ENVIRONMENT RATI NGS, SELECTED STAT ES
- Table: BMI BUSINESS AND OPERATI ONAL RISK RATI NGS
- Table: BMI LEGAL FRAMEWORK RATI NGS
- Table: MIDDLE EAST & AFRICA ANNUAL FDI INFLOWS
- Table: BMI TRADE RATI NGS
- Table: TOP EXPORT DESTINATI ONS
- Table: Key Retail Indicators, 2006-2013
- Table: Consumer Electron ics Overv iew
- Table: GLOBAL ASSUMPTIONS
- Table: GLOBAL & REGIONAL REAL GDP GROWT H
- Table: EMERGING MARKETS
- Table: COMMODITIES