Investor Presentation July 2021 slide image

Investor Presentation July 2021

Kuwait's Economy GDP Growth Public Finance and Inflation " " Recent Developments GDP declined by 8.8% in 2020 due to sharply lower oil production as Kuwait adhered to OPEC+ cuts and reduced non-oil activity resulting from the coronavirus pandemic. Headline growth could rebound to 0.5% in 2021 as these cuts are partially reversed. Non-oil GDP contracted 8.8% in 2020 after mobility restrictions were imposed to contain the pandemic. Growth could rebound 3.0% in 2021 as private consumption recovers. After cutting spending in FY20/21 to address the fiscal deficit, the FY21/22 budget outlined a 7% rise in outlays, including a targeted 20% rise in capex. If implemented, this would help spur the recovery in economic growth. Inflation accelerated to 2.1% in 2020, mainly on higher food prices, and is expected to average 2.5% in 2021; there is some downside risk from potential softness in residential real estate rents. Real GDP (% y/y) Total Non-oil 10 10 5.7 4.2 3.0 5 3.2 2.5. 2.6 5 1.3 1.1 0.5 0.0 0.6° 0 0 2.4 0.5 2.9 -0.6 -5 -5 -8.8 -4.7 -10 -8.9 -10 2013 2014 2015 2016 2017 2018 2019 2020 2021f Private credit (change, %y/y) 10 12 month average 8 6 10 Month end Consumer Sector Consumer spending took a major hit during the lockdown months, but has bounced back appreciably. Total spending (POS/ATM) was up 49% y/y in June 2021, albeit boosted by weakness at the same time last year. 8 6 Credit Growth Loan payment deferrals, the number of nationals in stable public sector jobs and reduced overseas travel have supported spending. Private credit growth has slowed so far this year, up 2.9% y/y in April 2021. But household borrowing is strong and business credit should benefit from the economy returning to a more normal footing. The policy interest rate is at 1.5%. Deposits were down 1.2% y/y in April, but the reinstatement of loan repayment deferrals should be positive; government deposit growth (-7.5% y/y) should get a boost from higher oil prices this year, helping liquidity. Real Estate Activity Property sales have returned to pre-Covid levels having been hard-hit in 2020. Recent strength is mostly from the residential sector which could hold up well given the solid demand base and potentially get a further boost if the mortgage law is approved. Sources: Central Bank of Kuwait, Central Statistical Bureau, Ministry of Finance, Refinitiv, NBK estimates 4 2 0 Apr-17 Apr-18 Apr-19 4 2 0 Apr-20 Apr-21 Real estate sales 12m average (KD mn) 200 Commercial 150 100 50 Residential 200 Investment 150 100 50 0 May-17 May-18 May-19 May-20 0 May-21 National Bank of Kuwait 17
View entire presentation