Investor Presentaiton
PUBLIC
Kuwait's Economy
GDP Growth
Public
Finance and
Inflation
Consumer
Sector
Recent Developments
Following a decline of 8.9% in 2020 due to the twin shocks of Covid-19 and
lower oil activity/prices, output is estimated to have rebounded by 1.1% in
2021, led by gains in private consumption and non-oil activity more broadly
(+3.5%). Oil sector GDP is estimated to have contracted by 1% in 2021 in line
with Kuwait's participation in the OPEC+ production cut agreement.
Looking ahead, headline GDP growth could reach 8.4% in 2022 on oil
(+13.1%) and non-oil sector output gains (+3.1%), with the latter benefitting
from consumer, real estate and refining sector output gains.
The fiscal deficit in FY21/22 is estimated to have narrowed to 8.5% of GDP
from 33% the year before. With oil prices forecast to average about $100/bbl in
2022, the fiscal balance could post a surplus of 7.8% of GDP in FY22/23 on
modest increase in expenditures.
Inflation averaged 3.4% in 2021 and likely peaked at 4.7% y/y in April 2022
amid elevated global food and commodity prices, rising housing rents and
robust domestic demand. Inflation is forecast to average 3.9% in 2022.
Consumer spending remains strong (+20% y/y to KD2.9bn in August),
according to one metric, benefitting during the summer from the retirees cash
allowance, healthy consumer borrowing and positive sentiment.
Credit Growth
Private credit expanded by 9.5% y/y in July on gains in household credit
(+13.1% y/y) and corporate credit (+6.6% y/y), both of which are running at
multi-year high rates of growth. The CBK followed the US Fed and raised its
key discount rate five times since March, by a total of 125 bps to 2.75%, with
more rate rises expected in 2022. Deposit growth, having turned positive in
January, accelerated to 7.7% y/y in July on increasing private sector deposits
(+8.3% y/y) and rising government sector deposits (+4.5% y/y).
Real Estate
Activity
Real GDP (% y/y)
Total
Non-oil
8.4
10
10
40
5.7
3.8
3.4
5
3.1
2.4
2.5
5
1.5
1.1
0.5
-0.1
3.1
0.6
0
0
2.4
3.5
1.1
-0.6
-5
-5
-8.8
-5.3
-10
-8.9
-10
2013
2014
2015
2016
2017
2018 2019 2020
2021e
2022f
Private credit (change, % y/y)
12
10
2086 +
4
2
0
Jul-19
Jan-20
Total
Jul-20
Jan-21
12m avg
8
12
2200 642
10
Jul-21
Real estate sales 12m average (KD mn)
250
Commercial
200
150
In 2021, property sales reached a 7-year high of KD3.7 billion, driven by
buoyant residential sector activity. In June 2022, total sales were up 12% y/y to
KD349 million. Final approval of a mortgage law in 2022-23 could boost activity
(and prices) as well.
100
550
Sources: Central Bank of Kuwait, Central Statistical Bureau, Ministry of Finance, Refinitiv, Haver, NBK estimates
Residential
Investment
0
Jan-22
Jul-22
300
200
100
Jun-18
Jun-19
Jun-20
Jun-21
0
Jun-22
National Bank of Kuwait 17View entire presentation