Kuwait's trade surplus narrowed slightly for the third consecutive quarter in 2Q14, to KD 5.7 billion, a report by National Bank of Kuwait (NBK) revealed on Monday. The surplus has been coming off its peak in 3Q13 on the back of softer oil export growth and the continued decline in non-oil exports (mostly petrochemical products), the report said. However, with the trade surplus projected to come in at 47 percent of GDP in 2014, it remains one of the largest by global standards, it added.
Oil export earnings slipped by KD 0.1 billion in the second quarter and currently stand at KD 7.4 billion, it said, noting that the decrease was smaller than the KD 0.3 billion drop in the first quarter of this year, thanks to higher Kuwait Export Crude (KEC) prices during 2Q14. The KEC prices rose by 4.4 percent y/y in Q2, rebounding from the 4.7 percent y/y decline in Q1. However, the rise in oil prices was not enough to counteract the 2.4 percent y/y decrease in oil export volumes. Growth in oil export revenues is set to weaken further in the third quarter, mainly on the back of lower oil prices, it pointed out.
According to the report, the Non-oil exports continued to decline in 2Q14, albeit at a lower rate of 3.2 percent y/y, compared to the 4.3 percent y/y fall in the previous quarter. Non-oil export earnings now stand at an almost two-year low of KD 0.4 billion.
Decreases were witnessed across all the major non-oil components, including ethylene products and re-exports. Ethylene export growth has been declining due to falling ethylene prices. Growth in this component is expected to continue to fall into Q3 of this year, on lower prices, putting downward pressure on overall non-oil export growth, it said.
Import growth continued to ease in 2Q14 from unsustainable double-digit growth last year. Growth came in at 5.4 percent y/y as imports reached KD 2.2 billion in 2Q14. The stronger KD will tend to make imports cheaper and more attractive.
Import growth is likely to pick up somewhat in the near term as economic growth in Kuwait accelerates. Healthy consumer demand combined with brisk implementation of investment projects should help push import growth higher in the medium term, it added.