Central bank governor Sheikh Salem expects Kuwaiti inflation to be between 5 and 6 percent this year
Kuwaiti inflation is expected
to be between 5 and 6 percent this year, the Gulf Arab state's
central bank governor said on Sunday, adding interest rates are
at a 'suitable' level.
Kuwait's annual inflation eased to 5.2 percent in January
from a nearly two-year high. Price pressure rose in Kuwait last
year, led by food costs, pushing inflation to 6.0 percent in
December, the highest rate in the oil exporting Gulf.
"We expect inflation in Kuwait in 2011 to reach 5 to 6
percent," Central Bank Governor Sheikh Salem Abdul Aziz Al Sabah
told a news conference.
Sabah also said the OPEC member's 2011 nominal gross
domestic product (GDP) was expected to be 8.3 percent, after an
expected 17.3 percent in 2010, based on IMF forecasts.
In the first half of 2010, Kuwait's economy recovered at a
slower pace than expected after shrinking 21.2 percent in
nominal terms in 2009 due to weak oil prices, data showed last
The nominal GDP of Kuwait, the world's fourth largest oil
exporter, dropped to KD31.5bn ($113.4bn) in
2009, from 40.0 billion in the previous year.
Several hundred protesters took to the streets last week for
the first time since the start of the Arab uprisings, demanding
an end to corruption and the removal of Kuwait's unpopular prime
On Friday, a small demonstration by stateless Arabs in the
north of the capital was met with volleys of teargas.
The global downturn hit Kuwait harder than other Gulf states
in 2009 as its economy is heavily reliant on the volatile
"The situation of liquidity is good. The percentage rise in
profits for local lenders in 2010 was 62.6 percent despite
provisions that were booked," Sabah said.
He also said he would expect a decline in the percentage of
non-performing loans in the first half of 2011, and that the
bank would not change its loan provisioning policy
Sabah also said that interest rates were "very suitable",
and that Kuwait would have no need to drop the peg, sticking to
its currency basket.
Kuwait is the only Gulf oil exporter tracking a currency
basket, after ditching the dollar peg in 2007.