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 17View entire presentation