Recent trade data show that Kuwait's trade surplus edged up to KD 6.1 billion in the second quarter of 2013, after dropping to below USD 6.0 billion in the previous quarter for the first time in over a year, according to a National Bank of Kuwait (NBK) report.
The surplus - estimated at around 12 percent of forecast (whole year) 2013 GDP - was boosted by a rebound in oil export receipts, which more than offset the impact of a surge in imports. These trade data are setting the stage for another super-strong year for the current account position overall: a surplus of more than 40 percent of GDP for 2013 seems likely.
Following a KD 0.4 billion drop in the first quarter, oil exports rebounded by some KD 0.3 billion to KD 7.6 billion - despite lower oil prices. Average oil prices fell USD 8 per barrel to USD 99 in the second quarter of 2013(-8 percent q/q), it showed. The rise in export receipts should have therefore come from higher oil export volumes, though data on this is not yet available. Oil production volumes did rise in 2Q, but not by enough to match the implied rise in oil export volumes, the NBK report said.
The near-term outlook for exports looks solid. The price of Kuwait export crude rebounded by more than USD 5 in 3Q13. Meanwhile, oil production - although not always a perfect proxy for export volumes (especially in the summer, when more fuel is required for domestic use) - was more or less unchanged from 2Q. Non-oil receipts were essentially flat in 2Q, and accounted for just 4 percent of all export receipts, it added.
Imports surged to an all-time high of KD 1.9 billion in 2Q13, breaking the previous record level set in 4Q11. Imports were up for the third consecutive quarter, a potential indicator of an improving non-oil economy. Furthermore, the annual growth in imports accelerated from 3 percent in the previous quarter to 7 percent - its fastest rate in the past year, though still below the 10 percent average seen in 2010 and 2011, it added. Over the next year or so, the trade balance could shrink a little: oil markets could loosen, putting downward pressure on prices or encouraging OPEC (including Kuwait) to cut oil production - affecting oil export receipts. Imports, by contrast, should grow, as consumer spending remains solid and project activity sucks in goods and labor, the report concluded.