DUBAI, Aug 12, (RTRS): Kuwait’s economy recovered at a slower pace than expected in the first half of 2010, after shrinking 21.2 percent in nominal terms last year due to weak oil prices, data showed on Thursday.

The global downturn hit Kuwait, the world’s fourth-biggest oil exporter, harder than other Gulf states in 2009 as its economy is heavily reliant on the volatile hydrocarbon sector.
The Opec member’s economy is expected to rebound this year, helped by higher oil prices and government spending plans. However, the second-quarter trade data released by the central bank pointed to sluggish domestic demand.

“Imports look more or less flat over the past two quarters. This does not fit very well with the notion of the economy recovering, it probably tells the story that the economy is doing a bit better but it is not exactly booming forward,” said Daniel Kaye, senior economist at the National Bank of Kuwait.
“In terms of most people’s hopes for the coming year about the government’s major investment programme, most of that programme really has not got going yet,” he said.
Imports fell 16 percent year-on-year in the second quarter, edging slightly higher compared with the previous three months, when they booked a 31 percent annual drop, the data showed.
Exports, of which oil accounts for 95 percent, jumped 30 percent from a year ago tracking the rise in crude prices, to reach their highest level since the third quarter of 2008. They rose by 67 percent in the first quarter. Kuwait’s trade surplus edged down slightly to KD 3.197 billion ($11.12 billion) in April-June, the data showed.

Kuwait plans to spend KD 30 billion in the next four years to reduce its dependence on oil, but its parliament only approved the state budget for this fiscal year in June, two months after the year started.
The oil and natural gas sector’s share of the country’s GDP fell to 45 percent last year from 59 percent in 2008, the data showed, though that was mainly due to lower prices and output cuts.
Kuwait’s nominal gross domestic product dropped to KD 31.5 billion ($109.6 billion) in 2009 from 40.0 billion the previous year, the data showed. It rose 22.7 percent in the oil-boom year of 2008.
The central bank did not release economic performance figures based on constant prices.
Central bank Governor Sheikh Salem Abdul-Aziz al-Sabah said last month that real GDP for 2009 was expected to have tumbled by 4.6 percent, worsening his March estimate for a contraction of up to 2 percent.
“The percentage drop is in line with what we have for other oil-producing countries in the region, especially Saudi Arabia,” said Reinhard Cluse, EMEA economist at UBS in London.
“The nominal GDP figure tends to fall in Opec countries together with declining oil prices, a trend we have seen during last year,” he said.
The central bank said in March it expected economic growth of 4 to 5 percent in 2010. Analysts polled by Reuters in June were more conservative, forecasting a 3.0 percent rise in real terms.
Indicators
Key Interest Rates    Discount    O/N Repo    1-WK Repo    1-MO Repo
rate    2.50 pct    0.75 pct    1.50 pct    2.00 pct
last change    Feb 7, 2010    July 21, 2009    Feb 8, 2010    Feb 8, 2010
former rate    3.00 pct    1.00 pct    1.75 pct    2.25 pct
Kuwait GDP (real, pct) (Y/Y)    2008    2007
    6.4*    4.4
(constant 2000 prices, pct) (Y/Y)
Final consumption    n/a    6.7
Government    n/a    1.5
Household    n/a    9.0
Gross capital formation    n/a    24.4
Foreign trade
Exports of goods and services    n/a    0.6
Imports of goods and services    n/a    29.5
Oil & gas    n/a    -2.3
Non-oil    n/a    11.1
*Kuwait GDP (current prices)    2009    2008
pct change year/year    21.2    22.7
bln dinars    31.500    39.991
Final consumption    18.191    16.447
Government    6.466    5.308
Household    11.725    11.139
Gross fixed capital formation    4.384    7.365
Foreign trade
Exports of goods and services    17.755    26.450
Imports of goods and services    8.829    10.271
Oil & gas sector    14.186    23.608
Note; Source: Central Statistics Office, Central Bank, * IMF estimate; The central bank expects GDP to grow by 4-5 percent in 2010 after an estimated contraction of 4.6 percent in 2009.
Kuwait Consumer Inflation    05/10    04/10    05/09
pct change month/month    0.3    0.0    0.2
pct change year/year    2.9    2.8    5.2
Note; Source: KUNA, Central Statistics Office.
Kuwait Money Supply    End-June 10    End-May 10    End-June 09
M1 change yr/yr (pct)    11.3    13.6    -0.22
M2 change yr/yr    0.5    0.3    21.5
M2-M1 pct change yr/yr    -2.2    -2.8    28.5
M3 pct change yr/yr    0.3    0.3    21.6
Bank private sector claims yr/yr    3.1    5.3    9.2
Kuwait C.Bank Foreign Assets
bln dinars    5.397    5.241    4.574
change yr/yr (pct)    18.0    3.9    24.8
Note; Source: Central Bank
Kuwait Budget    01-12/FY 2009/10    01-11/FY 2009/10    01-12/FY 2008/09
revenue (bln dinars)    17.92    16.02    21.01
expenditure    9.75    7.68    18.26
balance    8.18    8.33    2.74
Note; Source: Ministry of Finance; The fiscal year starts in April.
Kuwait Govt Fiscal Balance    2010/11    2009/10    2008/09
revenue (bln dinars)    9.72    17.92 (8.07)    21.00 (12.68)
n oil    n/a    16.85 (6.92)    19.71 (11.65)
expenditure    16.3    9.75 (12.12)    18.26 (18.99)
n investment    n/a    n/a n/a    n/a n/a
balance    -7.55    6.38 (-4.86)    0.643 (-7.59)
budgeted oil price ($/barrel)    43    35    50
Note; Source: Ministry of Finance, 2010/11 budget plan, 2009/10 provisional; original budget for fiscal years 2009/10-2008/09 in brackets.
*Kuwait Foreign Trade    Q2/10    Q1/10    pct y/y    Q2/09
(in bln dinars)
Exports    4.467    4.453    29.7    3.444
* oil exports    4.227    4.209    32.8    3.184
Imports    1.030    0.982    -16.0    1.227
Balance    3.197    3.227        2.217
Note: Oil exports are the central bank’s estimates.