Kuwait

With a recent increase in oil production and global crude prices above $100 per barrel, Kuwait is expected to run a substantial fiscal surplus in 2011 thanks to its hydrocarbons export revenues. But the country is looking beyond the market for crude oil and investing in refineries both at home and abroad.

Bank lending in Kuwait remained relatively flat during the first half of 2011, though this may have more to do with demand than banks being unwilling to extend credit.

With an announcement that a 35% stake in its national carrier is up for sale, the Kuwaiti government has taken another step towards privatising Kuwait Airlines, a project that has been in the works since 2008. At the same time, efforts are under way to build a national railway, with the government recently signing a contract with a consortium of consultancy firms to undertake research on a proposed rail link between Kuwait International Airport (KIA) and the country’s ports.

As the number of Kuwaiti students leaving the country to continue their education continues to increase, a trend that looks set to continue, those students who choose to stay at home will likely be affected by a recent decision to boost enrolment at state-run Kuwait University (KU).

Strong financial indicators in Kuwait have seen the country rewarded by a ratings upgrade. On July 20 Standard & Poor’s (S&P) announced that it was raising Kuwait’s long-term sovereign credit rating from AA- to AA, with a stable outlook. According to the credit rating agency, the economy’s strengths include high GDP per capita and healthy fiscal and external balance sheets, factors that have been accorded greater weight under S&P’s recently revised methodology for rating sovereign credit risk.

With the recent addition of a new 1400-MW power plant, Kuwait appears ready to meet the increase in electricity demand that occurs every summer. Government authorities are also planning to bring additional capacity on-line over the next few years, with the private sector expected to play a major role in this expansion.