New Market Research Report: Kuwait Country Risk Report Q3 2016

We expect the Kuwaiti economy to see modest growth over 2016 and 2017, forecasting real GDP growth of 1.5% and 1.2%, respectively, from -1.6% in 2015. After a long period of stagnation, the Kuwaiti investment outlook appears to be improving, while the prospects for consumption remain bright. However, we again highlight Kuwait's ever-volatile political situation as the key downside risk to economic activity.

Kuwait has seen a flurry of populist legislation recently, including several measures specifically targeting expatriate workers. This runs the risk of increasing uncertainty within the private sector, as well as cementing perceptions of the country as a hub of policy instability.

We expect tensions to remain between the government and the legislative branch, even with the election of a renewed 'loyalist' parliament.

We forecast average consumer price inflation for Kuwait of 4.0% and 3.5% for 2016 and 2017 respectively, up from 3.0% in 2015. While we expect a slight fall in Kuwaiti food inflation over the near term on the back of lower global prices, a tight supply picture in the real estate market will fuel housing inflation over the coming quarters, in a trend seen across the GCC.

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Key Risks

As ever, given the economy's heavy dependence on oil, any further downturn in global energy prices would prove disastrous. That said, Kuwait has the financial arsenal to cope with any short-term volatility in oil prices, and therefore the underlying risks in this regard are minimal.

Our forecasts assume that the implementation of the government's development plans will be slow owing to the impact of bureaucratic gridlock. However, the state certainly has the firepower to move forward with its capital spending plans if political compromises can be reached. Furthermore, a renewed loyalist parliament, following legislative elections in July 2013, offers the prospect of an acceleration of long-delayed economic reforms and infrastructure projects. Any improvement on this front would pose upside risks to our growth forecasts, as well as downside risks to our budget surplus projections.

Assess your risk exposure in Kuwait with our 100% independent forecasts assessing the pace and stability of this key market. Backed by trusted data from BMI Research's 52 million data point economic forecast model, this report will allow you to measure political, economic, business environment and operational risks in Kuwait with confidence.

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Delivery of the report in print and PDF
Online access for 12 months
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