Kuwait Country Risk Report

Published 22 July 2015 | Quarterly

  • 52 pages
  • Instant access to your report online and PDF format through your account library
  • Includes 3 free updated quarterly reports
$1,195.00
Kuwait Country Risk Report

Core Views

  • We expect the Kuwaiti economy to perform relatively well over 2015 and 2016, and retain our forecast for real GDP growth of 2.6% and 2.4%, respectively, from an estimated 2.7% in 2014. After a long period of stagnation, the Kuwaiti investment outlook appears to be improving, while the prospects for consumption remain bright. However, we again highlight Kuwait's ever-volatile political situation as the key downside risk to economic activity.

  • Kuwait has seen a flurry of populist legislation recently, including several measures specifically targeting expatriate workers. This runs the risk of increasing uncertainty within the private sector, as well as cementing perceptions of the country as a hub of policy instability.

  • We expect tensions to remain between the government and the legislative branch, even with the election of a renewed 'loyalist' parliament.

  • We forecast average consumer price inflation for Kuwait of 3.8% and 4.0% for 2015 and 2016 respectively, up from 3.0% in 2014. While we expect a slight fall in Kuwaiti food inflation over the near term on the back of lower global prices, a tight supply picture in the real estate market will fuel housing inflation over the coming quarters, in a trend seen across the GCC.

Key Risks To Outlook

  • As ever, given the economy's heavy dependence on oil, any further downturn in global energy prices would prove disastrous. That said, Kuwait has the financial arsenal to cope with any short-term volatility in oil prices, and therefore the underlying risks in this regard are minimal.

  • Our forecasts assume that the implementation of the government's development plans will be slow owing to the impact of bureaucratic gridlock. However, the state certainly has the firepower to move forward with its capital spending plans if political compromises can be reached. Furthermore, a renewed loyalist parliament, following legislative elections in July 2013, offers the prospect of an acceleration of long-delayed...

Executive Summary
5
Core Views
5
Key Risks To Outlook
5
Chapter 1: Political Outlook
7
SWOT Analysis
7
BMI Political Risk Index
7
Domestic Politics
8
No Fundamental Shift In Policy Following Attack
8
TABLE: POLITICAL OVERVIEW
8
Long-Term Political Outlook
9
Democracy: No Turning Back
9
Chapter 2: Economic Outlook
13
SWOT Analysis
13
BMI Economic Risk Index
13
Economic Activity
14
Lower Oil Prices And Lack Of Diversification To Hit Growth
14
TABLE: Key Economic Indicat ors
14
TABLE: Private Consumpti on Forecasts
14
TABLE: Government Consumpti on Forecasts
15
TABLE: Fixed Investment Forecasts
15
TABLE: Net Exports Forecasts
15
Fiscal Policy
16
Still In Wide Surplus Despite Weak Oil Prices
16
TABLE: Fiscal Policy
16
Banking Sector
18
Development Plans Driving Growth Opportunities
18
Monetary Policy
19
Higher Interest Rates To Cap Inflation Rises
19
TABLE: Moneta ry Polic y
20
Regional Islamic Finance
21
UAE To Cement Position As Regional Hub
21
Chapter 3: 10-Year Forecast
23
The Kuwaiti Economy To 2024
23
High Wealth, Yet Challenges To Growth
23
TABLE: Long -Term Mac roec onomic Forecasts
23
Chapter 4: Operational Risk
25
SWOT Analysis
25
Operational Risk Index
25
Operational Risk
26
TABLE: Operational Risk
26
Market Size And Utilities
27
TABLE: MENA - Market Size And Utilities
28
International Security Risk
30
TABLE: MENA - Interstate Secu rit y
31
Chapter 5: Key Sectors
35
Pharmaceuticals & Healthcare
35
TABLE: Pha rmaceutical Sales , Hist orical Data And Forecasts
36
TABLE: Healthcare Expenditure Trends , Historical Data And Forecasts
37
TABLE: Government Healthcare Expenditure Trends , Historical Data And Forecasts
37
TABLE: Private Healthcare Expenditu re Trends, Historical Data And Forecasts
37
Telecommunications
39
TABLE: Telecoms Sector - Historical Data & Forecasts
40
Other Key Sectors
43
table: Oil and Gas Sector Key Indicators
43
table: Infrastructure Sector Key Indicators
43
Table: Food and Drink Sector Key Indicators
44
Table: Defence and Security Sector Key Indicators
44
Table : Freight Key Indicators
44
Chapter 6: BMI Global Macro Outlook
45
Global Outlook
45
Event Risk Mounting But Manageable
45
Table : Global Assumptions
45
Table : Developed States, Real GDP Growt H, %
46
Table : BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %
46
Table : Emerging Markets , Real GDP Growth , %
47

The Kuwait Country Risk Report helps businesses with market assessment, strategic planning and decision making to promote growth and profitability in Kuwait. It is an essential tool for CEOs, Chairmen, Finance Directors/CFOs, Managing Directors, Marketing/Sales Directors with commercial interests in this emerging market.

An influential new analysis of Kuwait's economic, political and financial prospects through end-2019, just published by award-winning forecasters, BMI  Research.

Key Uses

  • Forecast the pace and stability of Kuwait's economic and industry growth through end-2019.
  • Identify and evaluate adverse political and economic trends, to facilitate risk mitigation.
  • Assess the critical shortcomings of the operating environment that pose hidden barriers and costs to corporate profitability.
  • Contextualise Kuwait's country risks against regional peers using BMI's country comparative Risk Index system.
  • Evaluate external threats to doing business in Kuwait, including currency volatility, the commodity price boom and protectionist policies.

The Kuwait Country Risk Report by BMI  Research includes four major sections: Economic Outlook, Political Outlook, Operational Risk and Key Sector Outlook.

Economic Outlook:

How will the Kuwait' economic policy-making and performance impact on corporate profitability over 2015-2019?

BMI provides our fully independent 5-year forecasts for Kuwait through end-2019 for more than 50 economic and key industry indicators. We evaluate growth, and also forecast the impact of economic management.

Economic Outlook Contents

The Kuwait Country Risk Report features BMI's forecasts with supporting analysis for 2015 through to end-2019, set against government views and BMI's evaluation of global and regional prospects.

Key Areas Covered:

Data:

  • Full 10-year forecasts with data - for key macroeconomic variables including GDP (real growth and per capita), population, inflation, current account balance and the exchange rate.
  • BMI's comprehensive Risk Index system - rates each country worldwide for economic and political risk, and rates the business environment, within a global and regional context.

Written Analysis:

  • Economic Activity - real GDP growth, employment, inflation, consumption (retail sales and confidence).
  • Balance of Payments - trade and investment, current and capital account.
  • Monetary Policy - interest rate trends (bank lending and deposit rates) and inflation (producer price and consumer price).
  • Exchange Rate Policy - currency controls, foreign investment flows, exchange rates and foreign exchange reserves.
  • Fiscal Policy - macroeconomic strategy and policies, government finance and tax reforms.
  • Foreign Direct Investment - approvals, inflows and climate.
  • External Debt - debt profile (short and long-term plus public and private sector obligations).
  • Global Assumptions - forecasts for each year to end-2019 covering: major commodities, growth in key regions, inflation, and interest and exchange rates, in the United States, Japan, China and the eurozone.

Key Benefits

  • Rely upon BMI's 100% independent forecast scenarios for Kuwait and underlying assumptions - we take no advertising and are privately-owned.
  • Exploit the benefits of BMI's comprehensive and reliable macroeconomic database on Kuwait, sourced and fully maintained by BMI from an extensive network of private sector, government and multilateral contacts.
  • Gain key insights into the current and future direction of government economic policy, which could significantly affect your company's business prospects, from BMI's team of analysts and economists.

Political Outlook:

What are the political risks to doing business in Kuwait over the next 5-years?

BMI's Kuwait country Risk Index evaluates the short- and medium-term threats to political stability.

Political Outlook Contents

  • SWOT Analysis for the Kuwait Market - Political Strengths, Weaknesses, Opportunities and Threats facing Kuwait.
  • Political Stability and Risk Assessment - BMI's Risk Index assesses explicit short- and long-term risks to political stability; latest positioning and trends for Kuwait's risk are compared with regional and global averages.
  • Current Administration and Policy-making BMI assesses the threats to the continuity of economic policy, and likely changes to the business operating environment.
  • Long-Term Political Outlook BMI examines the structural risks to the stability of Kuwait’s political system and the dominant public policy issues likely to affect decision-makers, and outlines scenarios for how the state could evolve in the medium to long term.

Key Benefits

  • Benchmark Kuwait's risk profile against its neighbours, the global and regional average, allowing easy comparison of risks between key business markets.
  • Identify, evaluate and anticipate political and security risks to the business environment, and to your company's current operations and future plans.
  • Gain valuable insights into government and policy-making, through BMI's specialist team of analysts and economists, and their network of private and public sector sources.

Operational Risk

What are the current operational risks and difficulties associated with doing business in Kuwait?

The Operational Risk section gives an evaluation of current risks and difficulties associated with operating in the market. It also provides a brief overview of the regional Operational Risk Index which benchmarks Kuwait against its neighbours.

Operational Risk Contents

The chapter provides a summary of the main threats in the country, within:

  • Labour Market Risk (Education; Availability of Labour; and Labour Costs)
  • Logistics Risk (Market Size and Utilities; Quality and Extent of the Transport Governance)
  • Trade and Investment Risk (Economic Openness; Government Intervention; and Legal Risks)
  • Crime and Security Risk (Crime; Terrorism; and Interstate Conflict risks).

The report also drills down in greater depth to address key issues in one of the following segments most critical to the market:

  • Transport network, economic openness, cost and availability of labour, crime risks, bureaucratic environment, market size and utilities, and interstate conflict.
  • Assess your company’s exposure to country specific operational and business risks, using BMI’s insight on the current dangers of operating in the market.
  • Evaluate Kuwait’s risk profile against its regional peers, helping you understand the market’s strengths and weaknesses in relation to other countries.

Key Sector Outlook*

Which industry sectors in Kuwait will grow fastest, and where are the major investment opportunities in the market?

BMI identifies investment opportunities in Kuwait's high growth industries including automotives, defence & security, food & drink, freight transport, infrastructure, oil & gas, pharmaceuticals & healthcare and telecommunications & IT.

Key Areas Covered:

  • Market Overview - Size and value of each industry, including recent sector developments and major industry key performance indicators (KPIs) that have impacted company performance.
  • 5-year Industry Forecasts - Forecasts for each year over 2015-2019, using BMI's proprietary industry modelling technique, which incorporates key domestic and international indicators - including economic growth, interest rates, exchange rate outlook, commodity prices and demographic trends - to provide fully integrated forecasts across and within each industry.
  • Demand- and Supply-Side Data/Forecasts - BMI's industry data covers both the output of each industry and the domestic demand, offering clear analysis of anticipated import/export trends, as well as capacity growth within each industry.

Key Benefits

  • Target strategic opportunities in high growth industries, which are benefiting from global mega trends, and thus offer strong investment and growth opportunities.
  • Compare the growth path of different industries to identify which are best placed to benefit from domestic and international economic prospects, and which have historically suffered from volatile growth trends - a key indicator of future risks.

*Not all Country Reports contain the Key Sector Outlook chapter. Please enquire above for more information.

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