Kuwait's economy  is expected to rebound this year, helped by higher oil prices and government spending plans, data released by the central bank showed.

However the second-quarter data released by the bank pointed to sluggish domestic demand.

The country's economy recovered at a slower pace than expected in the first half, after shrinking 21.2 per cent in nominal terms last year due to weak oil prices, it said.

The global downturn hit Kuwait, the world's fourth-biggest oil exporter, harder than other Gulf states in 2009 as its economy heavily relies on the volatile hydrocarbon sector.

'Imports look more or less flat over the past two quarters. This does not fit very well with the notion of the economy recovering, it probably tells the story that the economy is doing a bit better but it is not exactly booming forward,' said National Bank of Kuwait senior economist Daniel Kaye.

'In terms of most people's hopes for the coming year about the government's major investment programme, most of it really has not got going yet,' he said.

Imports fell 16 per cent year-on-year in the second quarter, edging slightly higher compared with the previous three months, when they booked a 31 per cent annual drop.

Exports, of which oil accounts for 95 per cent, jumped 30 per cent from a year ago, reaching their highest level since the third quarter of 2008.