Kuwait surplus to shrink amid 'gloomy' 2009 - NBK

DINAR PREDICTION: NBK sees Kuwait staying in surplus in 2009 but at a much reduced level. (Getty Images)

Kuwait is predicted to stay in surplus in 2009 but at levels of about 40 percent of those in the previous year, National Bank of Kuwait (NBK) has said in a new report.

NBK said that the impact of the hefty surge in oil prices in 2008 resulted in a KD4 billion boost to the balance of payments.

But bank analysts added that the outlook for this year was "gloomier and more uncertain".

"The current account is expected to remain in surplus, although at 40 percent of its level in 2008. This will directly be translated into less addition to foreign assets," the report said.

According to preliminary data released by the Central Bank of Kuwait (CBK), NBK noted that the current account surplus soared by 30.8 percent in 2008 to a record high of KD 17.4 billion, compared with a modest 1 percent growth over the previous year.

As a percentage of GDP, the current account surplus rose to 43.5 percent in 2008, up from 41.9 percent in the previous year.

The performance of the Kuwaiti economy in general and exports in particular remain highly vulnerable to the developments in oil prices, NBK noted.

The deterioration in the global economy has depressed oil prices since late 2008 and therefore negatively impacted Kuwait's receipts from oil exports, the report added.

According to foreign trade figures released by the CBK, oil exports in the fourth quarter of 2008 dropped 41 percent from their level in the same period of 2007, and further by 56 percent in the first quarter of 2009.

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