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KUWAIT CITY, Sept 11: The Arab Monetary Fund (AMF) in line with its continuous efforts to support the decision-making process in Arab countries has released the September edition of the Arab Economic Outlook Report containing updated forecasts of economic growth and inflation rates for Arab countries in 2019 and 2020.
The report says the weakness of the global economy will impact the external demand and that the Arab economies are expected to grow by 2.5 percent in 2019 and 3.0 percent in 2020.
The report goes on to say diversification efforts and economic reform programs will support the economic performance of the Arab countries during the forecasting period while the digital transformation, reinforcing human capital and reducing unemployment are the top future priorities.
Zeroing in on Kuwait, the report says the consumer price index increased by 0.8 percent in May 2019 compared to the corresponding month of 2018 as a result of high prices of food and beverages, clothing, housing services and furniture, household maintenance equipment, communication.
Health and transport group prices fell, while tobacco prices, education, entertainment and culture services, restaurants and hotels stabilized. This is due to developments in global commodity prices, domestic current spending rates, the re-pricing of some government goods and services such as electricity and water, and the decline in housing rents.
As a result of the previous developments, the inflation rate is expected to reach about 1.2 percent in 2019. In 2020, inflation is expected to be around 1.8 percent.
The report also said the economic growth is expected to be affected by the general trend of crude oil prices in international oil markets and developments related to the quantities of production, and continued growth of capital expenditure, and the expected implementation of the development plan projects in the coming years in accordance with the new Kuwait Vision 2035, “in addition to accelerating the pace of financial and economic reforms, regional geopolitical developments. As the extractive sector contributes to an estimated 42 percent of GDP, the GDP in 2019 and 2020 is expected to be influenced by developments in oil production levels, while the growth rate of the sector will also be affected by expectations of lower oil prices in 2019 and its stability in 2020.
However, it is expected that the output of the oil sector, especially in 2020, will benefit the government’s endeavor to enhance oil refining capacity through the entry of a number of projects in the field of oil production and refining into production during the projection horizon, where these projects include the operation of the Zour oil refinery with investments estimated at about $16 billion production capacity estimated at 615,000 barrels per day, and the project to produce “clean fuel” with investments of $12 billion to develop oil refining capacity.
Accordingly, Kuwait’s economy is expected to register an estimated growth rate of 1.6 percent in 2019, and growth will improve next year to 2.5 percent However, it is expected that the output of the sector, especially in 2020, will benefit from the government’s endeavor to enhance oil refining capacity through the entry of a number of projects in the field of oil production and refining into production during the projection horizon, including the operation of the Zour oil refinery.
The non-oil sector contributed most to the economic growth with the growth of the activities of a number of non-oil sectors, including the construction sector, which recorded a remarkable growth in 2018. The positive impact of the construction sector extended to other sectors, which contributed to the growth of these sectors such as real estate, finance, manufacturing and trade.