KUWAIT CITY: Kuwait’s trade surplus widened slightly for the second consecutive quarter in the third quarter of 2016, thanks to a continued recovery in oil prices; however, at KWD 1.4 billion, it still remains well below pre-2014 levels. According to an economic update from National Bank of Kuwait (NBK), the surplus should continue to improve as oil earnings continue to edge higher. Oil prices are expected to recover further following the announced production cuts by OPEC and non-OPEC producers.
The Kuwait export crude (KEC) price rose by two per cent quarter-on-quarter (q/q) in Q3 2016, pushing oil export revenues slightly higher to KWD 3.3 billion. Oil revenues are poised to move higher still in the near- to medium-term, amid a sustained recovery in oil prices, economists at NBK said. KEC was up seven per cent q/q in Q4 2016 and is projected to climb higher on the back of planned oil production cuts at the start of next year. However, oil export earnings were still down by nine per cent year-on-year (y/y).
Non-oil export earnings continued to trek higher on a quarterly basis, but were still down 12 per cent y/y. Non-oil export revenues rose by two per cent q/q in 3Q16, albeit at a slower pace compared to the previous quarter, after ethylene prices rose by a mere one per cent q/q. Growth in non-oil export receipts are set to continue to rise on the quarter in 4Q16 but at a slower pace, as ethylene prices rose more slowly. Imports contracted for the second straight quarter by one per cent y/y in Q3 2016, as growth in industrial supply imports slowed and consumer goods imports shrank from a year ago. Growth in industrial supply imports slowed from 15.6 per cent y/y in Q2 2016 to 5.7 per cent in 3Q16, while consumer goods declined by 8.8 per cent y/y.
Passenger motor cars and food & beverages, which account for 40 per cent of consumer imports, were down 12-15 per cent y/y. NBK said the declines are due to softer consumer demand as well as lower prices and a stronger dinar. Capital goods imports remained robust, which perhaps continues to be indicative of the Government’s improved implementation of its development projects. Growth in capital goods imports, a good gauge of domestic investment, rose by an impressive 20 per cent y/y in Q3 2016.
