Kuwait GDP to rebound by 4.4%

Kuwait’s real GDP is expected to rebound by nearly 4.4 per cent in 2011 because of higher oil prices and the country’s production while inflation will also pick up, the Arab Monetary Fund (AMF) has said.

A surge in oil export earnings will also allow the Gulf country to record high fiscal surplus again this year as the government is still restraining public spending unlike other Gulf hydrocarbon exporters, the Abu Dhabi-based AFM said.

“Kuwait’s real GDP is projected to rise by 4.4 per cent this year compares with around two per cent in 2010,” the Arab League’s body said in a study. “Inflation is expected to rise to 6.1 per cent from 4.1 per cent in 2010.”

The report, citing Kuwaiti government estimates, showed the country’s revenue surged by nearly 18.2 per cent in the 2010-2011 fiscal year over the actual revenue in the previous fiscal year for 2009-2010. Compared to budgeted earnings, the actual revenue leaped by 115 per cent.

It put the country’s oil export earnings at around KD19.441 billion ($66 billion) in fiscal 2010-2011 and expenditure at KD12.366 billion ($42 billion). This resulted in a fiscal deficit of KD8.54 billion ($29 billion).

“The surplus is projected to shrink to nearly KDfive billion ($17 billion) after the closing accounts are completed and all expenditures are defined,” it said.

In a recent study, National Bank of Kuwait (NBK) said it expected another large fiscal surplus in 2011-2012 because of strong crude prices and higher output by Kuwait, one of the largest OPEC oil producers.

 “Based upon our three price scenarios, the 2011-2012 budget should see another huge surplus. Oil prices would average between 32 and 50 per cent higher than last year, causing a surge in oil revenues.”

The report showed that the preliminary government budget sets total spending at KD 17.9 billion ($60.8 billion) this year. “Based upon our usual assumption that actual government spending comes in 5-10 per cent below budget, this would imply a surplus of between KD 9.1 billion and KD 14.8 billion  ($31-50 billion) before allocations to the Reserve Fund for Future Generations.”

It said the projected surplus in fiscal 2011-2012 could be as high as between

19 and 31 per cent of the forecast 2011 GDP.

Follow Emirates 24|7 on Google News.