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In principle, increase production in the next few years of 39, about a third of current levels Mechanism.
Non-oil growth improved to 3.3% in 2017 and is expected to reach 3.5% this year, marking a good performance for regional performance, with a slight possibility of decline.
He notes that consumer spending has maintained its pace of recovery since 2016, supported by strong job growth and low inflation, the erosion of government subsidies and the rebound in confidence. public by rising oil prices. For the first time in four years, capital expenditures will remain a priority (but this could happen later in the year), which will help offset the effect of rising interest rates. interest that could have a moderating effect.
In the short term, the need for reforms remains in place to support Long-term growth will continue, as it is a matter of reforming the labor market: the government remains the first employee of new Kuwaitis and will reform the labor market. Business environment by following reforms in the GCC's neighboring countries.
He pointed out that the reforms proposed by the government encountered some difficulties during his debate in the National Assembly, which led to the reduction of their value, such as the slight reduction of subsidies on fuel, Postponement of the imposition of the General Tax
He stated that if rising oil prices contributed to fiscal consolidation and credit rating, it could at the same time slow down the implementation reforms and delay the economic diversification plan.
Construction and Construction
The report highlights the contribution of the project allocation activity in support of non-oil growth, significantly in recent years, maintaining its vigor despite ongoing delays.He hoped that the projects planned for this year would reach 4 billion dinar Construction sector activity.
He added that this value is similar to the value recorded in 2017, but lower than the levels recorded in 2014 and 2015, which increased after the awarding of huge contracts in the oil sector, considering that oil activity is expected to support the stability of growth in the coming years The implementation of the government's five-year development plan (2015-2016 to 2011-2020) is one of the most important priorities and an essential element of Kuwait's strategy of turning Kuwait into a commercial and financial center by 2035.
The infrastructure has recovered significantly after the approval of two major projects, from the trap projects between the public and private sectors in May, in addition to preparing a new guide for partnership projects.
These developments should help restore confidence in the sector of the partnerships sector after the delay and cancellation of several projects.
The report also revealed the contribution of the consumer sector to support growth after recovery from the slowdown. Consumer confidence has stabilized in the first five months of the year to a much higher level than last year, while withdrawals and credit card spending have increased significantly. 8% year-over-year in the first quarter of 2018,, To record speed at its pace compared to the average of 2017 or 2017 of 7 percent.
He pointed out that consumer confidence remained strong in the second quarter of 2018. Personal loans remained at a good level.
Consumer spending is expected to continue to support growth in 2018, with rising oil prices and low inflation Increase in public spending and steady growth in Kuwaiti employment The decision to postpone the increase introduction of value added tax at least until 2021 will avoid any expected shock, even if consumer spending is slightly lower.
The real risks were high interest rates, although the Central Bank of Kuwait gave up raising its interest in June, in addition to reducing the number of expatriates in the policy to increase the interest rate. Kuwaiti employment in the private sector.
Inflation is expected to reach its lowest level in 15 years at 1% this year, slightly lower than expected, with increases being weak, with inflation stabilizing at 0.4 % of one year on the other in May and having averaged 0.7% Since the beginning of 2018.
The report stresses that general inflation remains low in This is due to two main factors: the drop in food prices in line with world food prices and the continuing decline in house prices. Percentage on an annual basis in May.
He reported that despite the low expectations of the pressures caused by housing and food components, other inflationary pressures remain low, while the dollar and the dinar have gained successively, slightly stronger this year because recovery of some of the decline witness last year, which could help reduce the cost of imports.
Inflation is also expected to decline due to base effects after a massive increase in the middle of the year, moderate economic growth and the lack of a cut-off plan for government subsidies in 2016 and 2017 with the improvement of financial conditions.
The VAT carry forward will not increase prices in 2019 as expected, and inflation is expected to reach 2.5% next year.
Budget deficit
The report reports a marked improvement in public finances, oil prices and the rationalization of spending, despite the forecasts of a medium-term budget deficit
have estimated the deficit at 6% of GDP for the 2017-2018 fiscal year, while oil revenues account for 90% of total revenue of 24% year-on-year due to the rise in the price of Kuwaiti export crude Z $ 54 per barrel on average.
At the same time, expenditures are estimated to have increased only 3% after a cumulative reduction of 17% over the past two years.
The budget ceiling for fiscal year 2018-2019 was set at 20 billion dinars and raised to 21.5 billion dinars, according to the report, noting that among these increases were non-recurring payments and transfers higher due to higher oil prices.
He revealed that the finance bill was finally passed at the end of June, indicating a 10% increase in spending this year, which would help boost demand in the economy, while waiting for a slight improvement in the deficit to 5% of GDP Due to rising oil prices and production.
He explained that with the elimination of non-recurring payments in the budget for the coming year, a further improvement in the deficit is expected despite the slight decline in oil prices.
Financial Situation
It points out that although the budget deficit continues to be recorded, Fort, because it accumulated savings from previous surpluses, which helped to pass the assets of the Sovereign Wealth Fund from 550 to 600 billion dinars, up to 5 times the gross domestic product, confirming the strong credit rating of the state to AA.
The return on assets not covered by the financial balance was estimated to be between 12 and 13% of GDP, while the government has managed to meet half of its financing needs since April 2016 when the program was issued. debt securities, including first obligations. The report points out that monetary policy in Kuwait aims to keep the dinar tied to a dollar-dominated basket of currencies, as the Central Bank of Kuwait kept the interest rate unchanged at 3% in June after raising the interest rate. Federal Reserve interest of 25 basis points, after having
Stock Exchange
The NBK report indicated that the Kuwait Stock Exchange had been reinstated following the decision of Morgan Stanley to put it on the Watchlist To advance the Emerging Markets Index in June 2019, after the FTSE Russell announced its two-stage upgrade in September and December.
He said that if that were to be done, the promotion of Morgan Stanley would bring more market flow than the expected value of the FTSE upgrade of $ 0.8 billion.
These decisions follow a number of market reforms aimed at improving demand, particularly from foreign investors and in anticipation of the planned IPO. He pointed out that despite the reforms and high oil prices, activity on the Kuwait Stock Exchange remained low this year compared to the markets of the region, the average daily value of trade approaching 11 million dinars in 2018, very low level compared to previous years.
This was attributed to the moderation of non-oil growth, or the attraction of investors to larger markets in the region such as Saudi Arabia and Abu Dhabi where reforms are more important .
The market is expected to experience a surge in activity and trade this year, mainly due to market-driven financial contributions and the anticipated introduction of "Integrated Holding The largest crane operator and heavy equipment in the Middle East. © Al-Rai 2018
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