By Andy Sambidge
Business Monitor International says political tensions could act as drag on investment climate
The unrest hitting the Middle East region will have only minimal implications for Kuwait and its economy will see 3.4 percent growth this year, a new report has said.
Business Monitor International said elevated oil prices would ensure that the Gulf state continues to run large current and fiscal account surpluses over the coming years.
However it added that "political tensions between parliament and the government" could act as a drag on the country’s investment climate.
The BMI report said: "We have revised up our forecasts for budget revenues on the back of the prospect for higher oil prices in 2011.
"However, given the $5bn fiscal stimulus package announced by the government at the start of 2011, we also expect to see a ramp up in government spending, and have left our headline budget surplus projections unchanged accordingly."
On key risks to its outlook for Kuwait, BMI added that "lingering tensions" in the Gulf state’s parliament, combined with the regional political crisis, could significantly distract the government from "pushing through much needed reforms to the business environment".
On Sunday, the International Monetary Fund said in a report that Kuwait’s economy was expected to expand by five percent this year, Bloomberg reported.