Kuwait: 2002 economic data (page 1 of 2)

In its latest economic brief on Kuwait's gross domestic product (GDP), National Bank of Kuwait reports that economic activity recovered in 2002 with GDP rising by 2.3% to reach KD 10.74 billion, according to figures released recently by the Ministry of Planning (MOP). The recovery follows a decline of 7.6% during 2001.

The non-oil sector was the main source of growth as it registered a rise in output of 6.2%, accelerating from 4.0% in 2001. The sector's contribution to GDP rose from 54% to 57%. Leading private sector activities including wholesale and retail trade, real estate and business services witnessed a pick-up, while financial institutions and construction experienced slower growth. Together, these activities account for roughly two-thirds of private sector GDP.

Petroleum refining also contributed to growth as production capacity was fully restored following a major accident in 2000. But the drop in the value of oil and gas output was far greater, causing oil GDP to fall by 2.5%.

MOP figures included upward revisions of 2000 and 2001 GDP estimates, to 27.8% and -7.6% from 23.7% and -8.5%, respectively. The bulk of the revisions were made in estimates of value added by the electricity, gas and water sector due to a change in methodology used. Estimates for this sector had generally been negative in the past reflecting below-cost revenue levels due to the high degree of subsidization by the government. The new methodology results in positive estimates that reflect value added by producers.

Oil GDP shrank by 2.5% to KD 4.84 billion following an 18% decline during 2001. The drop, which sees the contribution of the oil industry fall to 43% of GDP, was mainly a result of lower crude oil production due to a 10.5% decline in Kuwait's OPEC quota. An 11% increase in the average price of Kuwait crude helped compensate for the decline in the output quota during 2002.

Petroleum refining recovered in 2002 with the value added in this sector increasing by 15% to reach KD 431 million. Repairs to Kuwait's largest refinery that was damaged by a June 2000 accident were completed in September 2002, thereby restoring production capacity to its pre-accident level.

More than half of the growth in non-oil GDP came from the largest sector consisting of community, social and personal services. This sector, with a 58% share of the non-oil economy, grew by 8.7% mainly from growth in public administration & defense, education and health services. The increase in public administration and defense followed a flat year in 2001. Growth in education was consistent with the previous two years at 5.4%.

Activity in the wholesale and retail trade sector picked up with growth accelerating to 8.0% from 6.0% in 2001. The increase coincided with a sharp rise in imports. This sector benefited from the strong growth seen in household spending bolstered by the continued recovery in employment and a strong increase in consumer loans.

Trade represents one of the largest private sector activities with value added estimated at KD 678 million. It accounted for 10.8% of non-oil GDP and about twice as much of private sector GDP.
Other important private sector activities contributing to growth were real estate and business services, rising 5.2% and 9.3%, respectively.

In contrast, growth in value added by financial institutions was relatively anemic at 1.6%. The share of the finance, real estate and business services sector in non-oil GDP fell to 23.1% from 23.7% a year ago.