Kuwait Business Forecast Report Q3 2008

Publication Date	June 2008
Publisher	Business Monitor
Product Type	Report
Pages	60
ISBN Number	1745-0624
Product Code	BMI01227

Price

£250.00
approximately: $441 | €317

PDF immediate delivery

Order above formats by FAX

Summary

Investment Climate Unchanged... But Still Lacking The investment climate in Kuwait is largely unchanged in the aftermath of the parliamentary elections: a combination of broad political stability (albeit with a business-unfriendly parliament likely to stand in the way of reform) and stellar macroeconomic fundamentals will continue to attract attention. The usual issues - inflation, the need for a greater role for the private sector and the labour market - all remain in place. But overall, our core scenario is for continued strong growth, alongside generous fiscal and current account surpluses, with accompanying high levels of government investment, both domestically and abroad, through the Kuwait Investment authority.

We are leaving our political risk ratings unchanged following the election. The opposition managed to slightly strengthen its position, as we anticipated, through the new electoral system which saw the country divided into five (rather than 25) electoral districts for the first time. However, we do not see this resulting in any substantive changes to policy: parliament has been standing in the way of the government's reform plans since it was elected in 2006, which is why Kuwait's short-term political risk rating, at 81.0, is already below that of some of its neighbours. Continued political noise and debate is likely to follow, but the government and ruling family will maintain overall control.

On the economic side, our core scenario remains for a solid growth outlook, with stellar fiscal and current account surpluses. Our projected OPEC basket price for 2008 is US$96.50/bbl, revised up since our last Business Forecast Report but already starting to look conservative: we would not rule out a further upward revision in the coming months. We remain bullish on crude, and this will of course be good news, by and large, for Kuwait. Nonetheless, inflation is starting to hurt the outlook for consumer spending, and investment will be restricted by the uncompetitive business environment, meaning that government spending and net exports will remain the key drivers of growth.

Kuwait continues to lag most of its neighbours in terms of business environment, as reflected, not only by levels of inward investment, but also by our ratings, which put it second from bottom in the GCC group, with a score of 50.5. While Kuwait is clearly not short of the cash that FDI would generate, it is lacking a market-oriented economic policy that would allow its private sector to flourish, creating jobs and allowing it to follow a sustained diversified economic growth path. Indeed, of the three categories of our business environment ratings, market orientation is by far Kuwait's weakest area, with a score of just 31.0. It fares slightly better, if not spectacularly, in the other two categories, with 59.3 for infrastructure and 61.3 for institutions.

Content

Executive Summary
Chapter 1: Political Outlook
- SWOT Analysis
- Bmi Political Risk Ratings
- Domestic Politics
- Increased Sectarian Tensions: Threats Contained for Now
- Increased Sunni-Shi'a Tensions Will Add to The Stagnation in The Kuwaiti Parliamentary Process, but Should Not
- Pose Any Serious Threat to Overall Security and Stability
List of Tables
- Table: Kuwait Political Overview
Chapter 2: Economic Outlook
- SWOT Analysis
- Bmi Economic Risk Ratings
- Economic Activity
- Consumer Spending at Risk, but Government on Hand
- We Have Revised Our Real Gdp Growth Forecasts up for 2008-2012, on The Back of Another Quarter of Stellar Oil
- Prices
List of Tables
- Table: Kuwait - Economic Activity
- Balance of Payments
- Oil Revenues Benefit Global as Well as Local Economy
- Although Import Growth Is Increasing Sharply, Partially Due to Exchange Rate Dynamics and High Global Food
- Costs, Kuwait's Trade and Current Accounts Will Continue to Record Some of The Largest Surpluses in The World
List of Tables
- Table: Kuwait - Balance of Payments
- Regional Monetary Policy
- Inflation: An Economic and Political Threat
- Inflation Is A Problem That Is Not Going Anywhere and Threatens to Eat into Growth through Consumer Spending,
- Increased Private Sector Costs and Reduced Competitiveness
List of Tables
- Table: Kuwait - Monetary Policy
Chapter 3: Special Report
- Business Outlook for Global Frontier Markets
- Growing Fast on The New Frontier
- The 41 States That Bmi Examines in A New Report on Our Online Service May Make up Only A Small Slice of The
- World Economy, but They Possess Characteristics That Will See Them Gain Importance in The Eyes of Investors
- and Global Businesses over The Coming Years
List of Tables
- Table: Frontier Markets - Key Data and Projections for Top 10 Countries
- Frontier Investment
- Potential and Pitfalls
- The Spectacular Macroeconomic Performance of Frontier Markets in Recent Years Has Been Matched by Mildly
- Successful Efforts to Deepen Capital Markets
List of Tables
- Table: Gdp per Capita, US$ (in Order of % Increase)
- Table: Diversity through Frontier Markets - Correlation Coefficients January 2004-April 2008
- Table: Frontier Market Indices
- Regional Overview
- from Hidden Dragons to Final Frontiers
- Laos
- Neighbouring Economies The Key to Growth
- Laos's Gdp Growth Has Been Boosted in Recent Years as Neighbours China, Thailand and Vietnam Compete for
- Its Natural Resources
- Yemen
- Huge Potential, but Don't Bank on Gcc Membership
- Markets Do Not Come Much More Frontier than Yemen, and, as Would Be Expected, There Is Huge Potential for
- Development, with The Prospect of Eventual Gcc Membership Likely to Act A Key Investment Pull
List of Tables
- Table: Yemen Economic Activity
- Democratic Republic of The Congo
- Mining Industry to Drive Growth
- The Democratic Republic of The Congo's Mining Industry Will Be A Key Driver of Growth and Is Likely to Attract
- Significant Levels of Fdi, with Our Real Gdp Forecasts Standing at 8.3% and 7.9% in 2008 and 2009, Respectively
List of Tables
- Table: Democratic Republic of The Congo Economic Activity
- Cuba
- Investment Prospects after Fidel
- The Accession of A New Leadership Structure in Cuba Has Sparked Excitement That The 45-Year-Old Trade
- Embargo with The US May Be Lifted and Cuba May Move toward Market Liberalisation
List of Tables
- Table: Cuba Macroeconomic Data and Forecasts
- Mongolia
- Minerals to Drive Economic Boom
- Mongolia Is in The Midst of A Massive Resource-LED Economic Boom That Should Lift Gdp Growth into The Double
- Digits and Underpin Robust Increases in Exports and Inflows of Foreign Investment Capital over The Long Term
List of Tables
- Table: Mongolia - Economic Activity
Chapter 4: Business Environment
- SWOT Analysis
- Bmi Business Environment Risk Ratings
- Business Environment Outlook
List of Tables
- Table: Bmi Business and Operational Risk Ratings
- Institutions
List of Tables
- Table: Bmi Legal Framework Ratings
- Infrastructure
- Market Orientation
List of Tables
- Table: Middle East & Africa, Annual Fdi Inflows
- Table: Bmi Trade Ratings
- Table: Top Export Destinations, US$Mn
- Operational Risk
Chapter 5: Keys Sectors
- Petrochemicals
Executive Summary
- Bmi Forecasts That Pe Capacity Will Double to 1.2mn Tpa in 2009, alongside A Doubling of Ethylene Production
- Capacity to 1.65mn Tpa
List of Tables
- Table: Kuwait Petrochemicals Sector - Historical Data and Forecasts
- Oil and Gas
- Industry View
- Bmi Forecasts That Kuwait Will Account for 2.45% of Middle East and African Regional Oil Demand by 2012,
- While Providing 7.33% of Supply
List of Tables
- Table: Kuwait Oil & Gas - Historic Data & Forecasts