Current account surplus in Kuwait

Faisal Hasan, Senior VP of Investment Research Department at KAMCO talks about current account and trade surpluses in Kuwait.

He says, “In the last decade, Kuwait has reaped huge benefits in its current account. The current account surplus in Kuwait has been in the range of 25 to 40%, probably the highest in the GCC region. Any movement in oil prices, positive or negative, has a profound effect on the current account. For 2014 we expect it to remain high, as oil prices have averaged about $75 a barrel, as it has only gone down in the last couple of months.

But if oil prices continue to dip, it will affect the current account, because the break-even price for Kuwait is about $54 to $60 per barrel, which is among the lowest in the oil producing countries. It will have an effect on fiscal spending and current account surplus, but I don’t think it is a major issue right now, because in the last 9 to 10 years Kuwait has accumulated a good amount of surplus from the high oil prices. It can withstand any sort of decline in oil prices for the next 2 to 3 years. “