Kuwait Economic Outlook
After likely recording one of the region’s fastest growth rates last year, economic momentum is easing so far in 2023. The expansion in oil output slumped from 12% on average last year to just 3% in Q1, amid tighter OPEC+ quotas; deeper OPEC+-mandated cuts from May will further weigh on the energy sector in Q2. Moreover, higher interest rates are dampening the property sector, with real estate sales falling to a near three-year low in April. In addition, credit growth has trended down so far this year amid the fading of the post-pandemic spending boom. In politics, parliamentary elections have been called for 6 June, after the constitutional court annulled the 2022 election results. The ensuing near-term political paralysis will likely delay approval of the expansionary FY 2023 (April 2023 to March 2024) budget.
Inflation rose to 3.7% in March from 3.2% in February. Meanwhile, the Central Bank of Kuwait has kept its discount rate unchanged at 4.00% since late January despite multiple hikes by major central banks in the intervening period. Inflation should recede from its current level later in 2023 due to softening domestic demand.