Over­view and out­look

Kuwait Times - - BUSINESS -

Growth is ex­pected to pick up to 2.5% in 2017 from 2.2% in 2016 on higher oil and gas out­put and fur­ther ex­pan­sion in the con­struc­tion, fi­nan­cial ser­vices and trans­porta­tion sec­tors.

A sec­ond con­sec­u­tive, al­beit nar­row­ing, fis­cal deficit is ex­pected in 2017 (-5.1% of GDP), amid fis­cal re­straint and higher oil/gas rev­enues.

Public debt reached 67% of GDP in 2016 as the gov­ern­ment ramped up bond is­suance and ex­panded its de­mand for credit.

Pri­vate sec­tor credit growth re­mains weak at 5% y/y in April.

Liq­uid­ity has im­proved with higher en­ergy prices and bond is­suance; bank de­posit growth is out­pac­ing credit growth.

The bank­ing sys­tem is highly ex­posed to for­eign funds (38% of to­tal li­a­bil­i­ties), a key con­cern in the cur­rent diplo­matic cri­sis.

Bor­row­ing costs are up, CDS spreads have widened, equities are down.

The cur­rency is un­der pres­sure in the for­wards mar­ket, but no de-peg.

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