Kuwait’s trade surplus fell to a six-year low of KD1.7 billion ($5.6 billion) in the first quarter of 2015, or an annualized 20 per cent of projected GDP in 2015 as oil export revenues continued to tumble, a report said.

The fall is mainly attributed to the decline in export receipts as a result of lower oil prices, added the latest Economic Update from the National Bank of Kuwait (NBK).

The trade balance is unlikely to have deteriorated further in the second quarter (2Q) of 2015 given that oil prices improved slightly.

Oil export revenues declined by 49 per cent year-on-year (y/y) in 1Q15 to KD 3.6 billion, their lowest level in five years. Oil export earnings were bruised by lower oil prices.

The international oil price benchmark, Brent, slipped by 50 per cent y/y in 1Q15 to $54 per barrel. Oil export receipts may see a slight uptick in 2Q15, on the back of a slight recovery in oil prices in 2Q15. Brent averaged $64 in 2Q15.

Non-oil export growth also contracted in 1Q15, declining by 11 per cent y/y to KD 0.3 billion. Non-oil exports were stung by a fall in ethylene prices and a stronger Kuwaiti dinar against most major currencies (with the exception of the US dollar). “We may see non-oil exports inch higher in the near-term thanks to a recovery in ethylene prices in the second and third quarter of this year,” NBK said in the report.

Import growth edged up in 1Q15 boosted by growth in capital goods imports. Import growth has been gradually trending upwards for almost a year now. In the first quarter of 2015, imports rose by 11 per cent y/y, up from 8 per cent y/y in 4Q14.

Rising spending on capital projects appears to be a key factor boosting import growth. Capital goods imports were up a robust 23 per cent y/y in 1Q15. Transport equipment imports also witnessed a strong rebound, growing by 6.6 per cent y/y after contracting by 5.6 per cent y/y in the previous quarter. – TradeArabia News Service