Kuwait’s economic activity is forecast to improve in 2016 and 2017, driven by a surge in public investment and steady growth in consumption, according to a report by the National Bank of Kuwait (NBK).
The upbeat projection comes despite a major fall in oil prices seen since the middle of 2014, which has placed pressure on the government’s fiscal status.
The report, published by the Kuwait News Agency, notes that the Kuwaiti government has already taken some measures to rationalise public spending, adding that some of these measures are incorporated in the current budget, so the impact on the domestic economy is expected to be limited.
The NBK assures that pressure on the country’s fiscal and external status remains contained and manageable, indicating that the fiscal deficit should not exceed 6.2 per cent of gross domestic product in the 2015-2016 fiscal year and is projected to narrow to under four per cent in the following two years.
Furthermore, the government, by using massive fiscal and external buffers, is expected to maintain a relatively supportive fiscal stance despite the decline in oil revenues.
According to the report, the sovereign wealth fund is estimated at more than 400 per cent of GDP ($550 billion).
($1 = AED3.67, at the time of publishing)