Buoyed by high oil prices and increased oil production, Kuwait's real GDP is forecast to grow by 4.5 percent on further increase in oil production and increased government spending, IMF said, adding that the country's real GDP in 2011 is seen to have grown by 5.7 percent. Based on available data, Kuwait's total government revenue is expected to reach KWD29.5 billion for 2011/12 while expenses even if they touch the usually budgeted high figure of KWD19.4 billion will amount to a budget surplus of KWD10.1 billion, Global Investment House (GIH) said Friday in a new study. For FY2012/13, GIH estimates a surplus in the range of KWD0.6 - 11.2 billion, adding that Kuwait will post its fourteenth consecutive surplus in FY2012/13. Inflation rates in recent times have come down and for the month of February 2012 stood at 3.8 percent vs. 5.3 percent in the same month last year. With, pressure from international food and commodity prices expected to ease in coming months and a cautious domestic credit growth, inflation is expected to come down in the near term. For 2012, IMF projects Kuwait's inflation to slow down to 3.4 percent while EIU estimates it to come down to 4.4 percent. Global General Index declined 19.8 percent YoY amid global uncertainty and an internal political deadlock to reach 179.3 points at the end of 2011. Investment Index was the biggest loser, shedding 30.4 percent of its value. Trading activity declined further during 2011 as trading volume and trading value shrank 49 percent and 52 percent, respectively. The market capitalization of the entire market shrank by KWD6.9bn or 19 percent YoY. However, there is a sharp increase in trading activity in 1Q-2012 (value traded up 94 percent QoQ and 17.2 percent YoY) indicating increased investors' appetite and improved sentiment. Global General Index too is up 2.2 percent during the quarter. According to the Central Bank data, Kuwait's nominal GDP in 2010 grew by 17 percent to reach KWD35.6 billion vs. a decline of 23 percent during the previous year. The growth was primarily driven by a 22 percent jump in oil revenue as average Kuwait Export Crude oil (KEC) prices shot up by 26 percent to $76.3/b amid recovery in international markets (KEC prices had declined by 33 percent in 2009). The non-oil GDP too witnessed an increase of 12 percent in 2010 driven by a 28 percent jump in trade and 22 percent jump in the manufacturing sector. As per the latest available IMF numbers for 2011 (October 2011), the nominal GDP was expected to grow by 29 percent on the back of both higher oil prices (up 38 percent to $105.6/b) and increased oil production (up 10 percent in 2011 to 2.53bpd as per OPEC estimates). Since December 2010, Kuwait increased its oil production to assist in the effort to stabilize the global oil market. In real terms, for 2011, the IMF estimated the economy to grow by 5.7 percent.
