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Investor Presentaiton

Kuwait's Economy GDP Growth Recent Developments GDP declined by 8.9% 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 1.0% in 2021 as these cuts are partially reversed. Non-oil GDP contracted by 8.8% in 2020 after mobility restrictions were imposed to contain the pandemic. Growth could rebound by 3.2% in 2021 as private consumption recovers and refining activity ramps up. Public Finance and Inflation 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 2.6% in 2021; there is some downside risk from potential softness in residential real estate rents. Consumer Sector Credit Growth " Real Estate Activity Consumer spending took a major hit during the lockdown months, but has bounced back appreciably. Total spending (POS/ATM) was up 22.8% y/y in September 2021. Loan payment deferrals, the number of nationals in stable public sector jobs and reduced overseas travel have supported spending. Private credit growth was up 3.8% y/y at end-August, driven by strong household borrowing. Business credit has been slower to take off, but should benefit from the economy returning to a more normal footing. The policy interest rate is at 1.5%. Private and government deposit growth (-2.3% y/y and -2.6% y/y, respectively) was still negative in August; the reinstatement of loan repayment deferrals has been positive, as are higher oil prices, which have boosted government liquidity. 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 Real GDP (% y/y) Total Non-oil 10 10 5.7 3.8 3.2 5 3.1. 2.4 2.5 5 1.5 1.1 0.5 -0.1 0.6° 0 0 2.4 1.0 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 Month end 8 6 4 12 month average 10 10 8 6 4 2 2 0 Aug-18 Aug-19 Aug-20 0 Aug-21 Real estate sales 12m average (KD mn) 250 Commercial 200 150 100 50 50 Residential 250 Investment 200 150 100 50 0 Sep-17 Sep-18 Sep-19 Sep-20 0 Sep-21 National Bank of Kuwait 17
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