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Trade surplus slips slightly on lower oil prices in 2013 Imports reach all-time high of KD 8.3 bln

KUWAIT CITY, March 29: Recent data show that Kuwait’s trade surplus edged down to KD 24.3 billion in 2013, from a record KD 25.7 billion in 2012. The surplus — estimated at around 48% of 2013 GDP — was pushed down by lower oil export receipts during the year. Nevertheless, the surplus is still the second-highest on record, and extremely large by international standards. Though figures for the current account position have not yet been released, we expect it to have recorded another stellar year on the back of strong trade data. A current account surplus of up to 40% of GDP for 2013 seems likely.


Oil exports edged down to KD 30.8 billion in 2013, some 3% lower than a year earlier. This was due to lower oil prices, as oil markets eased in 2013 on the back of surging non-OPEC supplies and modest growth in global demand. Kuwait export crude prices averaged $105 per barrel during the year, some $4 (4%) lower than in 2012. Meanwhile, non-oil exports climbed to a record KD 1.9 billion - though still account for only 6% of total exports. These were mainly driven by higher exports of ethylene products, which were up by a large 16% y/y. Ethylene products’ contribution to non-oil exports has risen significantly over the past few years, from 12% in 2008 to some 40% by 2013 - partly related to capacity expansion in Kuwait’s petrochemical sector.


Imports saw steady growth of around 9% in 2013, and reached an all-time high of KD 8.3 billion. Imports provide an important indicator of domestic economic activity. On one crude measure, the latest import figures could indicate stable growth in non-oil GDP in 2013 - for which data is not yet available. Within the non-oil economy, Kuwait’s consumer sector has been an important growth driver; imports of consumer goods have grown at a faster rate than other types of imports in recent years.
This year, we expect the trade balance to shrink further, though remain very large. Oil markets are expected to loosen in 2014, putting downward pressure on prices and reducing oil export receipts. Meanwhile, the outlook for imports is mixed. A faster pace of execution of stalled government projects would provide a much-needed boost to the economy, while recent signs point to a slight softening in the consumer sector. Despite the latter, consumer spending should remain relatively strong, supporting growth in imports.





 

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