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Kuwait GDP to grow after 2009 drop

Kuwait, July 21, 2010

Kuwait's real GDP is expected to grow this year after dropping 4.6 per cent in 2009, the central bank governor said in remarks published on Tuesday.

Sheikh Salem Abdul-Aziz al-Sabah told the newspaper an-Nahar that real GDP for 2009 was estimated to be 18.8 billion dinars ($64.83 billion), compared to 19.7 billion in 2008.

He said real GDP for the oil sector was expected to grow by 1 percent in 2010, and the non-oil sectors by around 2.5 per cent. The governor did not provide figures or an overall percentage for this year.

Real oil sector GDP for 2009 was forecast to drop 11.4 percent to 7.1 billion dinars, and real non-oil sectors were forecast to record 'no significant growth' at 11.7 billion dinars, he said.

Demand for oil dropped in 2009 because of the slowdown in the world economy after the economic crisis. Oil is the mainstay of Kuwait's economy.

Inflation rate in the Gulf state was expected to stay at 'relatively stable levels' of 4 per cent for 2009, Sheikh Salem told the daily.

Gulf states, which invest a large chunk of their foreign exchange reserves in U.S. assets, have no flexible monetary policy to control inflation, which climbed to record, double-digit peaks in 2008.

Kuwait's central bank surprised the markets in February, cutting its key interest rates by 25 to 50 basis points to support growth, expecting inflation to stay low. The Gulf state's discount rate is currently at 2.5 percent.-Reuters

Tags: Kuwait | GDP growth |

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