Country Report Kuwait September 2017

Country Report Kuwait September 2017

  • September 2017 •
  • Report ID: 2557196 •
  • Format: PDF

Outlook for 2017-21



  • The emir, Sheikh Sabah al-Ahmad al-Jaber al-Sabah, will remain the ultimate political authority, although in the face of regional security threats the regime will become increasingly intolerant of public dissent.
  • Tensions between the executive and the legislature are likely to rise, reflecting divergent views on public spending priorities, hindering the implementation of the government's US$150bn project pipeline.
  • The fiscal account will remain in deficit in 2017-21. However, a modest recovery in oil prices will see the deficit narrow from 7.2% of GDP in 2017/18 (April-March) to 4.2% of GDP in 2021/22.
  • Real GDP is expected to fall by 1.2% in 2017, on the back of lower oil output and slower investment growth. Growth will recover in 2018 to 1.3%, and pick up to an annual average of 3.4% in 2019-21, reflecting higher oil output.
  • We expect inflation to average around 3% in 2017-21, on the back of some subsidy reform and gradually rising domestic demand growth.
  • We expect the current account to return to surplus in 2017 (6.1% of GDP), but still low oil prices in the medium term will prevent a further significant rise back to double-digit levels during 2018-21.


Review



  • The Civil Service Commission, a government agency that regulates employment in the public sector, has announced a decision to raise the replacement quota for Kuwaiti nationals in the public-sector workforce to 100% in five functional groups within five years.
  • The state-owned Kuwait Oil Company (KOC) has awarded an engineering, procurement, construction and commissioning contract to an Italian engineering company, Saipem, to build 450-km feed pipelines for the Al Zour refinery project.
  • As part of efforts to increase its renewable-energy generation to 30% of the total by 2030, Kuwait is preparing to issue a tender for the 1-GW Al Dibdibah photovoltaic (PV) solar power plant in the first quarter of 2018.
  • Annual inflation came in at 1.26% in July, down from 1.4% in June. This was mainly explained by deflation of 2.26% in housing services, showcasing the softness that has been visible in the housing market over the past few years.


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