11 April 2011
MUSCAT: Kuwait's real non-oil GDP must have grown 2.6 per cent in 2010 and projected to grow by 4.5 per cent in 2011 due to increased government spending on the recently approved development, the Gulf Investment House said, citing International Monetary Fund (IMF) figures.
Real oil GDP is expected to grow by 1.9 per cent in 2010 and by 4.3 per cent in 2011 due to increase in oil production.
Furthermore, credit agency Moody's stated in a recent report that the government's debt-to-GDP ratio is expected to decrease to 6.6 per cent in 2010 and down to 6.1 per cent in 2011.
Based on the Kuwait Development Plan (KDP), GDP is expected to grow at an annual rate of 5.1 per cent from 2010/11 to 2013/14. Overall, the economy is projected to gradually grow in the next few years as the global recovery increases oil demand; the implementation of the KDP will also boost the economy as the financial and construction sectors grow.
Kuwait's economy has significantly slowed down since the fourth quarter of 2008 after witnessing several years of steady growth. Kuwait's nominal GDP in 2009 experienced a 21 per cent decrease to reach KD31.5 billion, compared to a 23 per cent increase in previous year.
The non-oil GDP was not heavily affected as it increased by almost 6 per cent in 2009, while growing by 5 per cent in the previous year.
On the other hand, the oil GDP decreased by 41 per cent in 2009 after witnessing a 39 per cent increase in 2008. That significant decline in hydrocarbon figures was directly related to the diminishing oil prices that started in 2008 and continued in 2009.
The global financial crisis triggered a decline in oil, real estate, and equity prices which caused the economic slowdown in 2009.
In real terms, the GDP recorded a decline of 4.5 per cent in 2009, which was the worst in the Gulf Cooperation Council (GCC), to reach KD18.9 billion, compared to a 5.6 per cent growth in 2008.
The significant decline in oil prices and in the oil production rate due to Organisastion of Petroleum Exporting Countries (Opec) cuts (2.26 million bpd in 2009 compared to 2.55 million bpd in 2008) was the reason for the drop in 2009 real GDP compared to previous years.
As a result, per capita GDP witnessed a 22 per cent decline in 2009 to reach $33,718, compared to $43,190 in the previous year. Despite the decline in 2009, Kuwait's per capita GDP in terms of purchasing power parity is second highest among GCC countries after Qatar.
The contribution of non-oil sectors to the GDP increased four per cent to KD18.7 billion in 2009 after a five per cent growth in the previous year. Real non-oil GDP was estimated to have remained stagnant, which reflected a slowdown in the construction and financial sectors.
According to the IMF, real oil GDP declined by more than 11 per cent for 2009. Due to lower oil prices and production rates, the non-oil percentage contribution to GDP was 55 per cent in 2009 as opposed to 41 per cent in 2008.
Nominal gross domestic prodcut during the period 2005-2008 grew at a compound annual growth rate of 19 per cent. The healthy growth during that period was mainly backed by rising oil prices.
Similar to most GCC countries, the hydrocarbon sector is a main contributor to Kuwait's GDP as it represented an average of 53 per cent of nominal GDP during the same period. However, the hydrocarbon sector contributed 45 per cent of Kuwait's GDP in 2009 due to the decline in oil prices.
Oil prices in the beginning of 2009 floated around $40-50 and then gradually started increasing to reach $80/barrel by the end of 2009 (average was $61.76/barrel for 2009 vs $93.78 in 20008).
Due to the significant decline in oil prices, Opec ordered production cuts at the end of 2008 to limit the supply and raise prices. Oil and gas contribution to GDP was 53 per cent on average from 2005-08 while it dropped to 45 per cent in 2009.
Crude oil and gas contribution to GDP grew at a compound annual growth rate of 24.5 per cent from 2005-08, while 2009 faced a decrease of 41 per cent to reach KD14.2 billion. During 2010, oil prices increased to reach an average of $79.5/barrel, which is expected to increase the oil's contribution to GDP in 2010.
As seen in the economic and social development plan of Kuwait, diversifying the economy away from oil is the long-term development strategy of the country. The new development plan aims to privatise many public entities to improve competitiveness in all sectors. Based on the development plan, the real non-oil GDP will grow by an annual rate of 7.5 per cent from 2010/11 to 2013/14.
Community and Social Services contributed almost 18 per cent to Kuwait's GDP in 2009, witnessing the largest growth at 17 per cent to reach KWD5.6 billion. The second largest non-oil contributor to GDP was the Financial Institutions sector, which witnessed a 5 per cent decline to reach KD4.4 billion. After growing by 8 per cent in 2008, the transport, storage and communications sector decreased by 1 per cent in 2009 while contributing 8 per cent of the GDP.
The manufacturing sector, led by refined products, contributed 5 per cent of the GDP, which reinforces the importance of oil on Kuwait's economy. The Real Estate and Wholesale & Retail Trade were the other sectors of Kuwait's economy that had a significant impact on the total GDP.
Together, they represented almost 7.5 per cent of the GDP in 2009. Although some sectors witnessed growth in 2009, none of the sectors' growth rates in 2009 surpassed the growth witnessed in 2008.
MUSCAT: Kuwait's real non-oil GDP must have grown 2.6 per cent in 2010 and projected to grow by 4.5 per cent in 2011 due to increased government spending on the recently approved development, the Gulf Investment House said, citing International Monetary Fund (IMF) figures.
Real oil GDP is expected to grow by 1.9 per cent in 2010 and by 4.3 per cent in 2011 due to increase in oil production.
Furthermore, credit agency Moody's stated in a recent report that the government's debt-to-GDP ratio is expected to decrease to 6.6 per cent in 2010 and down to 6.1 per cent in 2011.
Based on the Kuwait Development Plan (KDP), GDP is expected to grow at an annual rate of 5.1 per cent from 2010/11 to 2013/14. Overall, the economy is projected to gradually grow in the next few years as the global recovery increases oil demand; the implementation of the KDP will also boost the economy as the financial and construction sectors grow.
Kuwait's economy has significantly slowed down since the fourth quarter of 2008 after witnessing several years of steady growth. Kuwait's nominal GDP in 2009 experienced a 21 per cent decrease to reach KD31.5 billion, compared to a 23 per cent increase in previous year.
The non-oil GDP was not heavily affected as it increased by almost 6 per cent in 2009, while growing by 5 per cent in the previous year.
On the other hand, the oil GDP decreased by 41 per cent in 2009 after witnessing a 39 per cent increase in 2008. That significant decline in hydrocarbon figures was directly related to the diminishing oil prices that started in 2008 and continued in 2009.
The global financial crisis triggered a decline in oil, real estate, and equity prices which caused the economic slowdown in 2009.
In real terms, the GDP recorded a decline of 4.5 per cent in 2009, which was the worst in the Gulf Cooperation Council (GCC), to reach KD18.9 billion, compared to a 5.6 per cent growth in 2008.
The significant decline in oil prices and in the oil production rate due to Organisastion of Petroleum Exporting Countries (Opec) cuts (2.26 million bpd in 2009 compared to 2.55 million bpd in 2008) was the reason for the drop in 2009 real GDP compared to previous years.
As a result, per capita GDP witnessed a 22 per cent decline in 2009 to reach $33,718, compared to $43,190 in the previous year. Despite the decline in 2009, Kuwait's per capita GDP in terms of purchasing power parity is second highest among GCC countries after Qatar.
The contribution of non-oil sectors to the GDP increased four per cent to KD18.7 billion in 2009 after a five per cent growth in the previous year. Real non-oil GDP was estimated to have remained stagnant, which reflected a slowdown in the construction and financial sectors.
According to the IMF, real oil GDP declined by more than 11 per cent for 2009. Due to lower oil prices and production rates, the non-oil percentage contribution to GDP was 55 per cent in 2009 as opposed to 41 per cent in 2008.
Nominal gross domestic prodcut during the period 2005-2008 grew at a compound annual growth rate of 19 per cent. The healthy growth during that period was mainly backed by rising oil prices.
Similar to most GCC countries, the hydrocarbon sector is a main contributor to Kuwait's GDP as it represented an average of 53 per cent of nominal GDP during the same period. However, the hydrocarbon sector contributed 45 per cent of Kuwait's GDP in 2009 due to the decline in oil prices.
Oil prices in the beginning of 2009 floated around $40-50 and then gradually started increasing to reach $80/barrel by the end of 2009 (average was $61.76/barrel for 2009 vs $93.78 in 20008).
Due to the significant decline in oil prices, Opec ordered production cuts at the end of 2008 to limit the supply and raise prices. Oil and gas contribution to GDP was 53 per cent on average from 2005-08 while it dropped to 45 per cent in 2009.
Crude oil and gas contribution to GDP grew at a compound annual growth rate of 24.5 per cent from 2005-08, while 2009 faced a decrease of 41 per cent to reach KD14.2 billion. During 2010, oil prices increased to reach an average of $79.5/barrel, which is expected to increase the oil's contribution to GDP in 2010.
As seen in the economic and social development plan of Kuwait, diversifying the economy away from oil is the long-term development strategy of the country. The new development plan aims to privatise many public entities to improve competitiveness in all sectors. Based on the development plan, the real non-oil GDP will grow by an annual rate of 7.5 per cent from 2010/11 to 2013/14.
Community and Social Services contributed almost 18 per cent to Kuwait's GDP in 2009, witnessing the largest growth at 17 per cent to reach KWD5.6 billion. The second largest non-oil contributor to GDP was the Financial Institutions sector, which witnessed a 5 per cent decline to reach KD4.4 billion. After growing by 8 per cent in 2008, the transport, storage and communications sector decreased by 1 per cent in 2009 while contributing 8 per cent of the GDP.
The manufacturing sector, led by refined products, contributed 5 per cent of the GDP, which reinforces the importance of oil on Kuwait's economy. The Real Estate and Wholesale & Retail Trade were the other sectors of Kuwait's economy that had a significant impact on the total GDP.
Together, they represented almost 7.5 per cent of the GDP in 2009. Although some sectors witnessed growth in 2009, none of the sectors' growth rates in 2009 surpassed the growth witnessed in 2008.
© Times of Oman 2011
