National Bank: Kuwaiti Economy Absorbed Initial Shock of Conflict, Several Economic Indicators Recover
A National Bank report confirms the resilience of the Kuwaiti economy, improvement in non-oil indicators, increased oil production, and stable inflation.
Translated by Qiyas from كونا — Original source
Kuwait City, 1 Oct (KUNA) – Kuwait National Bank said the Kuwaiti economy showed clear signs of resilience despite the conflict and ongoing disruptions in regional trade and shipping routes, as several key economic indicators recovered from the lows reached in earlier stages of the conflict. This suggests the economy has largely absorbed the initial shock, although conditions have not yet fully returned to normal.
In an economic report issued on Thursday, the bank said non-oil activity improved despite headwinds from trade disruptions and general uncertainty linked to the conflict, supported by government measures, stable household incomes, and easing inflationary pressures.
It added that oil production rose to three-quarters of its pre-conflict level, and with more shipments passing through the Strait of Hormuz, Kuwait is now in a better position to benefit from higher oil prices than in the early stages of the conflict. Improved economic data confirm that the non-oil economy will avoid a sharp slowdown.
The report noted that the latest development was oil prices surpassing $100 per barrel amid an expansion of the regional conflict and disruptions to trade flows. Kuwait’s crude export grade rose at a faster pace, recently exceeding $126 per barrel, widening its price premium over Brent crude. This reflects a shortage of medium-sour crude, which is in strong demand by Asian refineries.
It pointed out that Kuwait, along with Iraq and the non-OPEC UAE, managed to recover the largest share of production since post-conflict lows in March, with output reaching just over three-quarters of pre-conflict levels. This notable achievement will enable Kuwait to quickly reach its higher OPEC+ production ceiling of 2.68 million barrels per day once the strait is fully reopened.
The report also touched on a new law allowing the government to borrow from the Future Generations Reserve Fund. The legislation permits the government to borrow from the sovereign wealth fund, whose assets exceed $1 trillion, to enhance liquidity margins under strict controls.
It noted that after the approval of the Financing and Liquidity Law last year, short-term financing needs rose rapidly amid a sharp decline in oil revenues due to the regional conflict.
The report stated that the private non-oil sector Purchasing Managers’ Index (PMI) continued to expand in August, with the recovery supported by a rebound in demand. Production and new orders both jumped to their highest levels since February, thanks to competitive pricing and effective marketing efforts. Real estate sector activity also continued to improve in July, with property sales reaching KD 395 million (approximately $1.3 billion), the highest level since February.
The report clarified that consumer price index inflation slowed to a three-month low of 2.2 percent year-on-year in June, compared with about 2.5 percent in May, reflecting easing price pressures across most major categories.
It added that domestic credit rebounded in August, rising by 0.9 percent month-on-month after contracting by 0.2 percent month-on-month in July, driven mainly by a recovery in lending by banks and financial institutions and an increase in credit directed toward purchasing securities.
(End) F.N.K. / A.M.H.
