NBK Eco­nomic Up­date

Kuwait Times - - BUSINESS -

KUWAIT: Kuwait’s trade sur­plus was steady in 1Q17, hold­ing on to strong gains from a year ago thanks to an im­prove­ment in the price of oil. The trade sur­plus was steady from the last quar­ter de­spite a jump in im­ports, af­ter oil ex­port rev­enues sta­bi­lized. The sur­plus, at KD 1.6 bil­lion, is ex­pected to ex­pand some­what in the near- to medium-term as oil earn­ings gather pace on the back of some im­prove­ment in oil prices. The av­er­age price con­tin­ued to edge up­wards in 2Q17, and is slated to con­tinue to do so, es­pe­cially af­ter OPEC and non-OPEC pro­duc­ers de­cided to ex­tend pro­duc­tion cuts through 1Q18.

Oil ex­port rev­enues held steady, even as the price of Kuwait ex­port crude (KEC) rose thanks to lower out­put in line with the OPEC agree­ment. Oil rev­enues, at KD 3.7 bil­lion in 1Q17, were steady as a higher price of oil was off­set by a de­cline in Kuwait’s oil pro­duc­tion. The price of KEC was up 12% quar­ter-on-quar­ter (q/q) while pro­duc­tion was off by 5%.

Non-oil ex­port earn­ings jumped to a mul­ti­quar­ter high in 1Q17 mainly on stronger eth­yl­ene prices. Non-oil ex­port rev­enues rose by 37% year-on-year (y/y) in 1Q17, af­ter eth­yl­ene prices rose by 29% y/y dur­ing the same pe­riod. Non-oil ex­port earn­ings are ex­pected to pick up fur­ther in the sec­ond quar­ter, on the back of still higher eth­yl­ene prices.

Im­ports soared by a healthy 11% y/y in 1Q17 as cap­i­tal goods con­tin­ued to wit­ness solid gains and the drop in con­sumer goods im­ports mod­er­ated. Growth in cap­i­tal goods im­ports held strong at 16% y/y in 1Q17, as did growth in in­dus­trial sup­ply im­ports which came in at 20% y/y dur­ing the same pe­riod. The strong growth in these seg­ments is a re­flec­tion of the im­proved im­ple­men­ta­tion of the gov­ern­ment de­vel­op­ment projects. Con­sumer goods im­ports ap­peared to sta­bi­lize in early 2017 fol­low­ing a con­trac­tion driven by a slow­ing con­sumer sec­tor. Con­sumer im­ports saw a small 0.2% y/y de­cline, thanks to a re­bound in food & bev­er­age im­ports and as pas­sen­ger mo­tor car im­ports fell at a slower pace.

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