Investor Presentaiton

PUBLIC Kuwait's Economy GDP Growth Public Finance and Inflation Consumer Sector Recent Developments Oil sector output gains in 2022 (+12.1% y/y), coupled with consumer-led gains in the non-oil sector (+2.6%), are expected to have propelled headline GDP growth to a more-than-ten-year high of 7.6%. Looking ahead to 2023, headline growth could slow to -0.3%, largely on the back of OPEC-mandated oil production cuts, which will push Kuwait's oil sector GDP growth down to -3.7%. Non-oil activity is projected to increase by 3.8% (including refining) following the full commissioning of the Al-Zour refinery and by 3.0% excluding refining. The government is expected to post a fiscal surplus of 9.6% of GDP in FY22/23, its first since 2014, thanks to higher oil prices ($97/bbl on average in FY22/23), but expenditures are rising to cover higher welfare spending. The FY23/24 draft budget projects a deficit of KD6.8 billion on higher outlays including KD1.2 billion worth of non-recurring accruals (fuel/electricity subsidies etc.). However we project a smaller deficit of 3% of GDP in FY23/24. Inflation averaged 4.0% in 2022, up from 3.4% in 2021 on stronger demand and supply chain disruptions. Inflation was a still-elevated 3.7% y/y in May 2023, but should ease to an average of 3.4% for 2023 overall on softer economic growth,, tighter monetary policy and fading supply pressures. Consumer spending growth continued to moderate in 1Q23 (+13.8% y/y). In 2022 some KD42.5bn (+24% y/y) was spent on card transactions, with robust demand supported by strong consumer confidence, employment gains and rising prices. Domestic credit growth slowed to 2.7% y/y in May 2023. Household and business credit increased by 5.3% y/y and 2.1% y/y, respectively. 5 0 -5 12 10 20 86 Real GDP (% y/y) Total Non-oil 10 10 5 0 -5 -10 -10 2014 2015 2016 2017 2018 2019 2020e 2021e 2022e 2023f Private credit (change, % y/y) Total 12m avg 8 4 2 0 May-20 Nov-20 20 % 6 +2 4 12 10 May-21 Nov-21 May-22 0 Nov-22 May-23 Credit Growth In 2022, the CBK hiked the discount rate by a cumulative 200 bps to 3.5%, and followed this up in January 2023 with another 50 bps increase to 4.0%. Further moves by the CBK are possible, given anticipated US Fed rate hikes. Real estate sales 12m average (KD mn) 250 Commercial Residential Investment 300 Deposit growth eased to 3% y/y in May, with private sector deposits (around 78% of total deposits) increasing by 6% y/y over the same period, while government (including public institutions) deposits fell by 7% y/y to KD10.5 billion. 250 200 200 150 150 100 Real Estate Activity Real estate sales fell by 40% y/y in June 2023 to KD209 million as residential sales fell by 33% y/y to KD121 million amid rising valuations, while investment and commercial sales saw similar declines KD88 million. The outlook in 2023 points toward softer activity on rising residential valuations, rising borrowing costs, softer economic growth and uncertainty over reforms. Sources: Central Bank of Kuwait, Central Statistical Bureau, Ministry of Finance, Refinitiv, NBK estimates 100 50 50 0 0 Jun-19 Jun-20 Jun-21 Jun-22 Jun-23 National Bank of Kuwait 18

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