Kuwait's bullish strategy to beat slowdown
The Report, Kuwait 2010 prepared by Oxford Business Group (OBG), a global publishing, research and consultancy firm was launched in a press conference held in Courtyard Marriott Hotel.
Oliver Cornock, OBG's Regional Editor for the GCC, said, "The forward thinking measures adopted by the government, coupled with Kuwait's cushion of substantial energy reserves, meant the country was well placed to bounce back quickly from the economic downturn."
According to him the economy of Kuwait was strong because of the surging oil prices and higher oil production, the real GDP grew at 6.4 percent in 2008. Kuwait was greatly benefited as it was the fourth largest oil exporter. The growth of GDP from 2002 to 2008 was 22.8 % and 2007-2008 was the eighth year of budget surpluses.
During 2008-2009 the budget surplus was KD 2.74bn, 6.9% of its GDP, even with increased expenditures due to recapitalization of the State Pension fund which was 10.5% of GDP and due to lower oil revenues.
According to Cornock, the banks are still vulnerable as they have large number of distressed companies. However the sector, over all, has a strong capital adequacy ratios and stable domestic funds.
Cormock said that the government streamlined its financial sector with its new Financial Stability Law which provided loans to the important and solvent companies and laid stress of the productive economic activities. The law was opposed in the parliament but was eventually passed by Amiri Decree.
He further mentioned that the parliamentary interference is a part of Kuwait economy but is not as bad as the 90% revenues come from oil and with another year of substantial surplus, which is on the card, the pressure shall be off. Meanwhile reforms in the KIA, the world's first sovereign wealth fund, is being considered as it made losses like other such funds.
The report mentions about the resilience of the country due to the timely action of the government to inject money into the economy at the time of the economic down turn. The report reports about the sector by sector guide for the investors and a number of the view points of prominent political, economic and business leaders, which includes HH the Amir Sheikh Sabah Al-Ahmed Al-Jaber Al-Sabah.
In the report an in-depth analysis has been made of the hydrocarbon industry, its growth and the $84 billion investment plan for the industry. An insight has been made of the projects earmarked for funding and of the plans for the pipeline for petrochemicals, transportation and a new refinery.
The report also examines the country's plans for tapping the nuclear energy and the progress made in its plans to import liquefied natural gas.
The expansion of the non oil sectors in the country is also discussed in the report as a measure to diversify economy. It also mentions of the significant growth made in the manufacturing sector.
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