Real GDP growth rebounded to +1.9% y/y in Q2 from a contraction by -0.5% in Q1 (the latter was sharply revised downwards from a previous estimate of +1.6%). The rebound in Q2 was mainly due to a recovery in the non-hydrocarbon sector. In particular, the manufacturing sector surged by +11.4% in Q2 after declining by -13.1% in Q1. However, the construction sector continued to decline by -5.4% in Q2, albeit at a slower pace than in Q1
(-8.3%). Meanwhile, the oil and gas mining sector remained broadly flat in Q2 (-0.1% y/y, unchanged from Q1) as Kuwait kept oil output at a steady 2.7mn bbl/day in 2017 and H1 2018. Following the revised OPEC agreement from end-June, oil production has been raised by +3.7% to 2.8mn bbl/day since July. This should contribute to stronger GDP expansion in H2 and take the full-year 2018 growth rate to +1.8% (after a -3.5% contraction in 2017). We expect oil output to be increased further next year and forecast growth of +2.8% in 2019.
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Weekly Export Risk Outlook 7 November 2018