Kuwait City - Oil-driven economic growth in the Gulf state of Kuwait is forecast to slow down this year and in 2014 as crude output is expected to remain flat, the National Bank of Kuwait said in a report Sunday.
After Gross Domestic Product (GDP) grew by a healthy 6.1% in real terms last year, thanks to continued strong oil income, it is forecast to drop to 3.2% in 2013 and to 2.5% in 2014, NBK said.
Following a massive contraction of around 8% in 2009 due to the impact of the global financial crisis, Kuwait's economy gradually rebounded to grow by around 8% in 2011 as oil output and price remained high.
Oil income in the OPEC member contributes an average of 95% to public revenues. Kuwait ended the past 13 fiscal years in the black and is forecast to post a huge budget surplus in the current fiscal year which ends on March 31.
Oil GDP, which grew by 15% and 10% in 2011 and 2012 respectively, is expected to remain flat this year and contract by around 1.5% in 2014, according to the NBK report.
But the bank revised upward expected non-oil GDP growth from 4% to 5% this year based on signs of greater determination by the authorities to implement large infrastructure projects.
Most projects under a $110bn four-year development plan, that runs until 2014, have been stalled because of a political crisis in the emirate.
The opposition has staged protests to demand the dissolution of parliament elected last month on the basis of an electoral law that was amended by the emir, claiming that the change is illegal and aimed at electing a rubber stamp body.
But over the past few months, authorities either signed or gave the green light for mega projects worth around $40bn, mostly in the oil and power sectors.
Inflation this year and next is expected to remain moderate at between 3-4%.
Kuwait says it sits on around 10% of global oil reserves and pumps around 3.0 million barrels per day. It is estimated to have $400bn in foreign assets run by the sovereign wealth fund.
The emirate has a native population of 1.2 million in addition to 2.6 million foreigners, mostly Asians and Arabs.