Kuwait Economic Brief. December 2017

December 17 Oil prices hold on to recent gains; Government spending accelerates inflation bounced up to 1.% in November...Credit growth to close in October; improved corporate 1 at.%...kd 1 billion budget earnings still signaling some surplus expected for FY 1/13 softness Kuwait Economic Brief An update of recent developments in select sectors in Kuwait published by Economic Research at NBK

Kuwait Economic Brief - December 17 Contents Oil markets 1 Oil prices hold on to recent gains but markets uneasy ahead of OPEC meeting Monetary developments Steady credit growth at 3.1% in September; 3Q17 closed weaker Consumer price inflation Inflation bounced up to 1.% in October supported by the retail sector Balance of payment Current account surplus improves in Q17 Real estate 1 Real estate activity picks up in October, amid stable prices Corporate earnings 1 Improved corporate earnings still signaling some softness Stock market 17 Government s resignation weighs on Boursa in November

Kuwait Economic Brief - December 17 Oil markets Oil prices hold on to recent gains but markets uneasy ahead of OPEC meeting > Omar Al-Nakib Senior Economist +9 9 3, omarnakib@nbk.com Highlights Brent continues to hold above $ and looks on course to notch up a third consecutive month of gains; prices boosted last week by closure of Keystone pipeline in the US after an oil leak. Chart 1: Crude oil prices ($/bbl) ICE Brent (Front month) NYMEX West Texas Intermediate (WTI, Front month) Market sentiment had turned more negative recently as US crude output surged to a shale-era high (9. mb/d) and uncertainty surrounded Russia s commitment to extend the OPEC/non-OPEC production cut agreement. OPEC to meet on 3 November to discuss agreement extension after crude production fell in October to 3.9 mb/d (13% compliance). 3 3 The US will become the largest crude and petroleum liquids supplier by, the IEA estimates in its World Energy Outlook 17. Markets are likely to be over-supplied in 1, leading to an increase in OECD stocks. Brent holds above $ in anticipation of OPEC/non-OPEC meeting With major oil markers, Brent crude and West Texas Intermediate (WTI), currently ranging around the $3 and $ levels, respectively, oil prices look on course to notch up a third consecutive month of gains. (Chart 1.) Last week, prices were given an unexpected boost by the closure, after an oil leak, of the Keystone pipeline in the US which transports Canadian crude to refineries on the US Gulf Coast. Since their 17-low in June, Brent and WTI are up by at least 3%, a four-and-a-half month bull run that has been driven by a combination of better-than-expected global demand growth, tighter crude supplies and heightened geopolitical risk. OPEC, for its part, has commendably stuck to its task of cutting crude output, averaging 97% compliance over the ten months of the agreement so far. OPEC has also achieved some success in its other key performance yardstick: drawing down OECD commercial crude and petroleum product stocks to the five-year average. The most recent data from the International Energy Agency (IEA) shows inventories falling in September to below 3 billion barrels for the first time in two years. (Chart.) Admittedly, Hurricane Harvey was a factor in this, with its negative impact on US petroleum product stocks, but the trend has been generally downward for most of the year. And markets have, by and large, been receptive to the data supporting OPEC s efforts. They have also been reassured by OPEC and its non-opec partners willingness to do whatever it takes to drain the supply glut and rebalance the market. 3 3 Nov-1 Feb-17 May-17 Aug-17 Nov-17 Source: Thomson Reuters Datastream Chart : OECD commercial crude & product stocks (billion barrels) 3.1 3.1 3. 3..9.9...7.7.. Sep-1 Dec-1 Mar-17 Jun-17 Sep-17 Source: International Energy Agency (IEA) Chart 3: US crude oil production & rig counts 1. Crude oil production (mb/d, LHS), 9. Oil rig count (no. of oil rigs, RHS) 1, 9. 1, 9. 1, 9. 1, 9. 1,..... Nov-1 Aug-1 May-1 Feb-17 Nov-17 Source: US Energy Information Administration (EIA), Baker Hughes But lately, having priced in the likelihood that the oil producers would announce a nine-month extension of their production cut agreement when they meet on the 3 November, markets became a little less certain that such an outcome will materialize. In fact, hedge funds appear to have pulled back on the record net long positions (the difference between bets on a price increase and bets on a price fall) that they had NBK Economic Research, T: (+9) 9, F: (+9) 973, econ@nbk.com, 17 NBK, www.nbk.com 1

Kuwait Economic Brief - December 17 been building over the last couple of months. The trigger has been Russia, whose oil producers appear to be wavering in their appetite to roll over their output cuts until the end of 1, so soon before the agreement expires in March 1. Indeed, echoing Saudi Arabia s official stance when Ali Al-Naimi was at the helm of the oil ministry, Russia s oil men are unwilling to pull back on production only to cede further market share to competitors such as the US, whose crude exports are indeed making inroads in Russia s largest export market: China. (-year old restrictions on US crude exports were lifted by the Obama Administration in December 1.) OPEC s prospects face difficult headwinds from US shale s resurgence To be sure, Brent is holding above $. While this is a level that is being viewed in some quarters, perhaps optimistically, as oil s new price floor, markets are, nevertheless, anxious. This unease has been further fuelled by the resurgence of US shale; just last week US crude output posted another shale-era high, reaching 9. mb/d (of which shale comprises %) and shows every sign of continuing to increase. (Chart. 3) For every barrel of crude taken off the market by OPEC/non-OPEC in 17, the US has managed to resupply almost half a barrel. So OPEC is left to grapple with an especially challenging conundrum: the more successful the group is in reducing global oil balances as a means to raise the price of oil their ultimate objective the more likely US crude producers ramp up output. US shale is highly price-responsive and, with a large backlog of drilled but uncompleted wells (DUCs), production could respond very quickly. The IEA s recently released World Energy Outlook 17 weighs in on the potential for US shale growth in the medium to long-term. And it does not make for comfortable reading for the established oil producers. According to the IEA, not only have the technically recoverable reserves of US shale been revised upwards, by 3%, but shale oil production itself is expected to more than double by (from the current. mb/d to 13. mb/d). More than % of the.9 mb/d of non-opec oil production that is expected on stream by will be sourced from the US. Thus the US will become, in the words of IEA Executive Director Fatih Birol, the undisputed leader of global oil and gas markets for decades to come. Therefore, as a result of shale s gains, the IEA predicts that OPEC s share of the global oil market will most likely fall, from 3% in 1 to 1% in. The good news for OPEC, however, is that the IEA also expects US growth to plateau by the end of the next decade and then reverse in the 3s, with a concomitant rise in OPEC s market share to % by... 1. 1... Chart : World demand & supply growth (mb/d) -.. 1 1 1Q17 3Q17 1Q1 3Q1 Source: IEA, NBK estimates; *assumes OPEC output stays at current level 33. 33. 3. 3. 31. Chart : OPEC crude oil production Source: OPEC (secondary sources) (mb/d) "Call"on OPEC crude in 1 31. 31. Oct-1 Jan-17 Apr-17 Jul-17 Oct-17 1 1 99 99 9 9 97 97 9 9 Chart : Balance of supply & demand (mb/d) Balance/Implied stock change (RHS) Demand (LHS) Supply* (LHS) World demand growth World supply growth* 33. 33. 3. 3. 31. -. -. 9-1. 1 1 1Q17 3Q17 1Q1 3Q1 Source: IEA, NBK estimates; *assumes OPEC output stays at current level.. 1. 1.. 1.... Sobering as this may sound, prices could still reach $/bbl in, the IEA noted in its base case, New Policies Scenario. The reason: the dearth of investment in conventional oil projects since oil prices collapsed in 1. This could amount to a loss of. mb/d (.% of global supplies) from global oil balances every year a volume that even burgeoning US oil will not be able to entirely offset. Oil demand growth to slow in the medium-to-long term due to improved fuel efficiency and increased use of electric vehicles Global oil demand growth is expected to slow markedly from 1. mb/d this year to an average of.9 mb/d over the next five years. As we move into the next decade, increased fuel efficiency and energy pricing policies as well as substitution by alternative fuels will begin to significantly NBK Economic Research, T: (+9) 9, F: (+9) 973, econ@nbk.com, 17 NBK, www.nbk.com

Kuwait Economic Brief - December 17 impact oil consumption. Casting a shadow over the outlook for oil in the transportation sector, which is by far the largest consumer of oil, will be the electric car. The IEA reckons that by, the global electric car fleet could expand to million from million today. Moves to phase out conventional gas and diesel vehicles have already started, as evidenced by France and Britain s plans to ban their sale by. Back to you OPEC to manage global supply Despite the recent elevation of the US to swing producer status, it will still be left to OPEC, which supplies more than 3% of the crude oil market, to manage global crude balances. With demand growth expected to slow in 1 to 1.3 mb/d a downward revision of.1 mb/d that the IEA states is due to relatively mild early winter temperatures and non-opec supply expected to increase by 1. mb/d next year thanks to US shale, OPEC s first order of business is to confirm the production cut extension. (Chart.) Anything less than nine months, however, could spark a market sell-off. Second, OPEC may need to tie down wayward producers, Iraq and the UAE, who have yet to fulfil their obligations eleven months into the agreement. Nigeria and Libya, whose production is not subject to quotas, will also need to be co-opted. These two combined have supplied an additional, b/d of oil this year, which has negated around half of the 1. mb/d of production withdrawn by the twelve other OPEC members. Therefore, as well as extending the production cuts, OPEC may also need to deepen them. The IEA puts the call on OPEC s crude in 1 at 3. mb/d, which is almost, b/d below current OPEC output of 3. mb/d, according to OPEC secondary source figures. (Chart.) Clearly, despite compliance of 13% among the twelve OPEC agreement signatories in October, production is above what the IEA expects the market to be able to absorb next year. In consequence, OECD inventory levels are expected to increase rather than decrease, in at least two quarters in 1. (Chart.) At the end of the day, OPEC and its partners may need to come to terms with the fact that, thanks to US shale and advances in unconventional crude production, the structure of the oil market appears to have irreversibly shifted. However, with the lowest costs in the business, OPEC and especially the GCC oil producers can still put up the stiffest fight. The game is most certainly on. NBK Economic Research, T: (+9) 9, F: (+9) 973, econ@nbk.com, 17 NBK, www.nbk.com 3

Kuwait Economic Brief - December 17 Monetary developments Steady credit growth at 3.1% in September; 3Q17 closed weaker > Nemr Kanafani Senior Economist +9 9 3, nemrkanafani@nbk.com > Chaker El Mostafa Economist +9 9 3, chakermostafa@nbk.com A solid gain in credit was recorded in September, though 3Q17 s overall performance was visibly weaker. Credit saw a net gain of KD 31 million on the month, with the number boosted by usual end-of-quarter gains. Growth, however, slipped to 3.1% year-on-year (y/y). Credit s performance for 3Q17 as a whole was underwhelming, registering at a quarterly annualized pace of 3.%, compared to 7.3% for the first half of 17. The bulk of September s gains came from lending for the purchase of securities. Private deposits saw a second month of strong gains, while interest rates held steady. Household lending was subdued in September, though growth was steady at 7.% y/y. Personal facilities excluding securities lending added a net KD 7 million during the month, well below its year-todate average of KD 9 million. This followed a strong performance the previous month. All remaining credit (excluding nonbanks) saw a relatively modest gain in September, though this was largely from the regular end-ofquarter jump in lending for the purchase of securities. Credit gained KD million, with growth slipping to 1.3% y/y. Outside securities lending, there were some gains in trade and other sectors, but these were offset by declines in real estate and construction. While productive business sectors saw only a small gain during the month, growth in this segment remained relatively robust. Productive business credit, which excludes real estate and financial sector lending (i.e. lending to nonbanks and lending for securities), ticked up to.1% y/y. This figure continues to be held back by the large settlements made in Q1. Nonetheless, growth in productive sector credit thus far in 17 averaged an annualized 1% compared to.9% for total credit. Private deposits saw a second month of solid gains in September. Deposits rose by KD 3 million largely on the back of gains in KD time and KD sight deposits. Yet despite the pick-up, money supply (M) growth slipped slightly to.% y/y. Meanwhile, government deposits declined by KD 1 million, with growth easing further to 3.% y/y. The banking system s liquid reserves, or excess liquidity, edged lower in September to.% of bank assets. Bank reserves (cash, deposits with the CBK, and CBK bonds) decreased by KD 73 million to KD. billion (Chart ). This coincided with KD million in net issuance of public debt in September. This increased outstanding domestic public debt instruments (PDIs) to KD.97 billion, or an estimated 13% of GDP. Domestic interest rates in September were little changed from August. The 3-month interbank rate edged up basis points to settle at 1.7% (Chart ), though rates have moved slightly higher since. Customer deposit rates were unchanged on the month. 1 9 7 3 1 Source: Central Bank of Kuwait Chart 1: Credit growth (% y/y) Sep-13 Sep-1 Sep-1 Sep-1 Sep-17 1 1 - -1-1 - Chart : Credit growth by component Source: Central Bank of Kuwait (% y/y) - - Sep-13 Sep-1 Sep-1 Sep-1 Sep-17 1 1 - Chart 3: Money supply growth Source: Central Bank of Kuwait Household debt Business credit (all remaining) Non-bank financials (% y/y) M1 M -1-1 Sep-13 Sep-1 Sep-1 Sep-1 Sep-17 1 9 7 3 1 1 1 - -1-1 - 1 1 - NBK Economic Research, T: (+9) 9, F: (+9) 973, econ@nbk.com, 17 NBK, www.nbk.com

Kuwait Economic Brief - December 17 Table 1: Monetary indicators 1-month 3-month 1-month Sept-17 change change change KD mn KD mn % KD mn % KD mn % Total system liquidity (M) 3,3.7. 9. Currency in circulation 1,1-1 -. - -1.9 9. Private sector deposits 3,9 3 1. 3 1. 1. KD deposits 3, 33 1..9 1,3. Sight deposits,3 9 1.1-117 -1..7 Savings deposits,77-3 -.7 - -1.7 1 3. Time deposits & CDs 19,31 9 1.. 1,.7 Foreign currency deposits, 3 1.. - -19.7 Source: Central Bank of Kuwait Table : Consolidated bank balance sheets 1-month 3-month 1-month Sept-17 change change change KD mn KD mn % KD mn % KD mn % Total bank assets 3,131 3. 3.9,17. Core liquid assets,19-73 -. - -9.9-1 -1. Cash and CBK deposits 797 7.9 - -3.1-19 -19. CBK bonds, -1-13. - -17.3 - -1. Time deposits with CBK 79 1 17.9 11 1. 9 1. Public debt instruments, 1. 1,.3, 7. Interbank deposits 1,3-1 -11. -377-1. -3-1. Credit facilities 3,3 31.. 1,7 3.1 Foreign assets 1, -3 -.3-1 -1.7-391 -3. Other assets 3,97 17.9 91 7.9 3 1.1 Total bank liabilities,3 3.7 1.9,3.3 Total deposits 3,3 11.3 3.1 739 1.7 Private sector deposits 3,9 3 1. 3 1. 1. Government deposits 7, -1 -.7. 3 3. Interbank deposits 1,313-19 -1.9-3 -. -311-19.1 Foreign liabilities, 17 3.3 11. 1,. Other liabilities, 7 1. 33.7 1,7. Shareholder equity,31-1 -.1 9. 3. Source: Central Bank of Kuwait 1 1 1 Chart : Bank reserves (% of bank assets) Sep-13 Sep-1 Sep-1 Sep-1 Sep-17 Source: Central Bank of Kuwait. 1. 1. 1. 1. 1..... Chart : Interbank rates (%, 3-month rates, daily) US Libor 3M KIBOR 3M Spread.. Nov-13 Nov-1 Nov-1 Nov-1 Nov-17 Source: Thomson Reuters Datastream.31 Chart : Exchange rates USD / KD (LHS) Euro / KD (RHS) 1 1 1. 1. 1. 1. 1. 1......1.3.39.9.3..3.7.31 Nov-13 Nov-1 Nov-1 Nov-1 Nov-17 Source: Thomson Reuters Datastream NBK Economic Research, T: (+9) 9, F: (+9) 973, econ@nbk.com, 17 NBK, www.nbk.com

Kuwait Economic Brief - December 17 Consumer price inflation Inflation bounced up to 1.% in October supported by the retail sector > Hiba Koraytem Senior Economist +9 9 33, hibakoraytem@nbk.com > Nemr Kanafani Senior Economist +9 9 3, nemrkanafani@nbk.com Consumer price inflation bounced to a multi-month high of 1.% in October, as inflation in the retail sector provided a healthy boost to the general index. (Chart 1.) Inflation excluding housing rent, food costs and energy prices, rose from.% y/y in September to 3.3% y/y in October, highlighting some upward inflationary pressures from retail goods and services, which coincided with the improving momentum in the consumer sector. The annual average inflation rate for 17 is likely to ease to 1.%, from the 3.% annual average recorded in 1. While there are some upward pressures from the retail goods segment and some services, these pressures are likely to be offset by continued softness in housing rent and food prices. Housing inflation remains subdued during the third quarter of 17. The slowdown in the real estate sector sales in 1 and 1 has led to an orderly and slow correction in property prices and rents. Housing inflation trended down from Q1 to reach deflationary territory in 1Q17. Housing inflation witnessed an uptick in October to -.3% y/y, due to basis effects. Local food price inflation remained soft in tandem with weaker inflation in global food prices. Inflation in local food prices advanced slightly in October to.% y/y, following a flat month. (Chart 3). According to the Commodity Research Bureau, inflation in international food prices contracted slightly. This weakness is likely to limit any significant increases in local food costs in at least the near-to-medium term. Inflationary pressures in the retail sector rose in October, just as consumer spending continued to see improvement. (Chart.) Consumer spending improved in 3Q17 with growth in card spending (POS) accelerating to 1.% y/y, following a systematic moderation in 1. Card spending has bounced back as the sector stabilized. At the same time, inflation in the three major retail goods related components accelerated to near multi-month highs, with inflation in clothing and footwear accelerating to.9% y/y in October from 1.9% y/y the previous month. Inflation in services excluding housing services continues to trend downward in October on the back of fading price growth in transportation costs due to base effects. (Charts and.) Despite the downward pressures from transportation prices, inflation in services excluding housing services remained supported by continued gains in inflation in the recreation & culture segment and steady inflation in restaurants & hotels. Inflation in restaurants & hotels was steady at its multi-month high of 3.% y/y in October, while inflation in recreation & culture rose from.% y/y to.7% y/y during the same period. 3 1 Chart 1: Consumer price inflation (% y/y) Oct-1 Oct-13 Oct-1 Oct-1 Oct-1 Oct-17 Source: Central Statistical Bureau, NBK estimates 7 3 1-1 - Chart : Inflation in housing services Source: Central Statistical Bureau (% y/y) Chart 3: Inflation in food & beverages Source: Central Statistical Bureau General index Core (excl. food & bev.) CPI excl. food & housing -3-3 Oct-1 Oct-13 Oct-1 Oct-1 Oct-1 Oct-17 - - (% y/y) Kuwait prices (LHS) International prices (-month lag, RHS) - Oct-1 Oct-13 Oct-1 Oct-1 Oct-1 Oct-17 3 1 3 1 7 3 1-1 - -1 - -3 NBK Economic Research, T: (+9) 9, F: (+9) 973, econ@nbk.com, 17 NBK, www.nbk.com

Kuwait Economic Brief - December 17 Table 1: Consumer price inflation (% change) Year-on-year Annual Avg. Sept-17 Oct-17 1 1 Food & beverages.. 3. 1.7 Tobacco & cigarettes.1.1..3 Clothing & footwear 1.9.9.3. Housing services* -1..3-.1.1 Furnishing & household maintenance 3.7 3. 3.7.3 Healthcare..9 1.7 1. Transportation 1.7 1.7.9.1 Communication -.1... Recreation & culture..7 -.3-1. Education 1.9 1.. 3. Restaurants & hotels 3. 3..3.9 Other goods & services. 3... Core**. 1. 3. 3.9 7 3 1-1 - -3 Chart : Inflation in other sectors (% y/y) Clothing & footwear Furnishings & household maintenance Other goods & services - - Oct-1 Oct-13 Oct-1 Oct-1 Oct-1 Oct-17 Source: Central Statistical Bureau 7 3 1-1 - -3 Durable goods.9 1.3.. Semi-durable goods 1.. 1. 1.1 Non-durable goods 3.... Services -....9 Services ex-housing 3.3 3. 3.9. Chart : Inflation in services ex. housing (% y/y) Services ex-housing Services General Index. 1. 3.7 3. Source: Central Statistical Bureau, NBK estimates * Updated once every quarter ** Excludes food & beverages; estimated by NBK 3 3 1 1-1 Oct-1 Dec-1 Feb-17 Apr-17 Jun-17 Aug-17 Oct-17 Source: Central Statistical Bureau, NBK estimates -1 1 1 1 1 Chart : Inflation in transportation (% y/y) 1 1 1 1 - - Oct-1 Oct-13 Oct-1 Oct-1 Oct-1 Oct-17 Source: Central Statistical Bureau NBK Economic Research, T: (+9) 9, F: (+9) 973, econ@nbk.com, 17 NBK, www.nbk.com 7

Kuwait Economic Brief - December 17 Balance of payments Current account surplus improves in Q17 > Nemr Kanafani Senior Economist +9 9 3, nemrkanafani@nbk.com > Fatema Akashah Economist +9 9 3, fatemahakashah@nbk.com The Kuwait s current account surplus improved slightly in Q17 on lower remittances, a decline in imports, and some gain in investment income during the quarter. The surplus improved to KD. billion, up from KD. billion in 1Q17 (Chart 1), rising to an annualized.9% of GDP. The balance continues to show broad improvement from a year ago, thanks in large part to the higher oil price during the first half of 17 compared to the year before. 1 Chart 1: Current account (KD billion) Workers' remittances Investment income Services Goods Current account (% of GDP, RHS) 3 We expect the improvement in the current account over the last year to continue given the increase in oil prices witnessed in 3Q17 and thus far in Q17. The current account balance during the first half of 17 improved to a KD 1.1 billion surplus, compared to a KD.7 billion deficit the year before. We expect this trend to continue for the remainder of 17, with the current account balance rising to around -% of GDP for the full year. This is due largely to higher oil prices. The price of Kuwait export crude averaged $ per barrel during the first half of 17, up from $3 the year before. Prices moved higher still after that, reaching $9. in November, a 3% increase from June s average. Oil exports have seen healthy growth on the back of higher oil prices, even as production declined due to OPEC cuts. Oil export receipts rose by 17% year-on-year (y/y) in Q17, as Kuwait oil price rose by 1%. Non-oil exports, which are dominated by petrochemicals, also rose in tandem, rising by 1% y/y. Imports have also continued to see solid growth, putting some pressure on the trade balance. Imports grew by 7% y/y, boosted in part by strong demand for capital goods imports. This strong growth follows some weakness in 1, which is possibly linked to weaker consumer demand. This growth offset some of the gains from oil exports, though the trade balance still managed to increase by KD. billion y/y during the second quarter. The services deficit widened slightly, reflecting a jump in Kuwaiti travel spending, though this is likely a one-off. The net services outflow rose by 9.% y/y to KD 1.7 billion on a 1% y/y increase in travel expenses. Despite this increase, spending on travel services has eased notably over the last year. Spending was flat in 1, after seeing double-digit growth in prior years. It has eased further in 17, with spending shrinking by 3% y/y during the first half of the year. Investment income was largely flat, though it did provide some support to the current account versus 1Q17. Investment income rose 3.1% quarter-on-quarter (q/q) to KD 1. billion in Q17. The trend in this item has generally been quite supportive over the last year, with investment income during the first half of 17 up.9% y/y. This reflects the continued accumulation of assets in Kuwait s sovereign wealth fund despite the lower price environment and the fiscal deficits being recorded, as well as rising rates globally. - - - Q1 Q1 Q1 Q1 Q1 Q1 Q17 Source: Central Bank of Kuwait 3 1 Chart : Trade balance Source: Central Bank of Kuwait; * Kuwait Export Crude 1. 1. 1. 13. 1. 11. 1. 9.. 7. Balance on goods (% of GDP, LHS) KEC* oil prices ($ pb, RHS) Q1 Q1 Q1 Q1 Q1 Q1 Q17 Chart 3: Worker remittances (% of GDP).. Q1 Q1 Q1 Q1 Q1 Q1 Q17 Source: Central Bank of Kuwait; NBK estimates 1-1 1 1 1. 1. 1. 13. 1. 11. 1. 9.. 7. Another source of support to the current account has come from easing worker remittances. Worker remittances declined by 1% y/y in Q17. Remittance outflows had already eased notably from the double- NBK Economic Research, T: (+9) 9, F: (+9) 973, econ@nbk.com, 17 NBK, www.nbk.com

Kuwait Economic Brief - December 17 digit growth seen before 1; they shrank by 9% between 13 and 1. The decline is likely due to the lower oil price environment. Cuts in subsidies and increases in various fees have increased the cost of living. At the same time, an increased emphasis on Kuwaitization has reduced demand for expatriate workers. Chart : Financial account (KD billion) Table 1: Summary of Kuwait s balance of payments (KD million) Level Change 3Q1 Q1 1Q17 Q17 KD mn % y/y Current account 9 1 17. Goods (net) 1,7,1 1,91, 71 9.9 Exports 3,,13,1,179-3 1.9 Oil exports 3,3 3,7 3,71 3,73 1 17.1 Non-oil exports 3 19 7 3-1.1 Imports -1,919 -,1 -,31 -,1 7.7 Services (net) -1,1-1,1-1,3-1,71-3 9. Investment income 1,33 1,13 1, 1,7 1-1.3 Workers remittances -1, -1,1-1,19-1,3 137-1.3 Other investment - -17 3-19 -1 1. Current +capital account 3 79 179. Financial account -1 3 -,33-39 1,9-397. Direct investment (net) -37-7 13-1,7-1,3 19. Portfolio investment (net) -1,1-1, -3, -1,1 1,.3 Other investment (net) 7 3,1 1, 3,13 1,7 1.1 Reserve assets -7-9 -7-13. Net errors & omissions 3-1,97-19 -,1 -.3 Overall balance - 7 9 7 - -13. - - - - Direct investment Portfolio investment - Other investment Reserve assets - - - Q1 Q1 Q1 Q1 Q1 Q1 Q17 Source: Central Bank of Kuwait Chart : Central bank reserves (months of imports) 1 1 1 1 Source: Central Bank of Kuwait 1 1 Jun-1 Dec-1 Jun-1 Dec-1 Jun-1 Dec-1 Jun-17 Source: Central Bank of Kuwait; NBK estimates NBK Economic Research, T: (+9) 9, F: (+9) 973, econ@nbk.com, 17 NBK, www.nbk.com 9

Kuwait Economic Brief - December 17 Real estate Real estate activity picks up in October, amid stable prices > Fatema Akashah Economist +9 9 3, fatemahakashah@nbk.com > Hiba Koraytem Senior Economist +9 9 33, hibakoraytem@nbk.com Improvement in real estate activity continues apace as sales posted strong growth figures and prices remained relatively stable. Total real estate sales grew an impressive % year-on-year (y/y) in October, the highest monthly growth since June 1, reaching KD 1.9 million, on revived activity in the commercial sector as well as strength from the residential sector sales. Total transactions picked up to units in October, rising 3% compared to the same period last year. Prices remained on the recovery trend overall, except for the residential home price index that saw a return to early 17 price levels. 3 3 1 Chart 1: Monthly real estate sales (KD million) Inv. property sales Resid. property sales Comm. property sales 3 3 1 The residential sector bolstered the real estate market once again in October, continuing the supportive role witnessed throughout 17. Residential sales jumped 3% y/y in October to KD 11.3 million with a healthy 37 transactions (Chart ). In the first ten months of this year, sales activity in the residential property market as a whole has grown by % compared to the same period last year. Residential homes made up over % of transactions. In residential land sales, there was strong activity in the Sabah Al-Ahmad coastal area with 31 plots sold, Abu Ftaira with 3 transactions, and Al-Funaitees with plots. Residential land prices continued their recovery after the slowdown in the first half of the year, while residential home prices softened slightly. The NBK residential home price index reached 1. in October, down 1.% from a year ago. The NBK residential land price index picked up further to 17.7, down only 1.1% y/y (Chart 3). The price indices both show progress, given the pace of decline in both indices was more pronounced in the first half of the year. Investment property sales show pick up but are still lower than the prior year s monthly average. October sales reached KD.1 million, a better performance than the 3Q17 monthly average, but remained below the 1 monthly average of KD million (Chart ). Investor interest may be coming back on improved expectations; oil prices have recovered and the government has shown it is committed to the development plan with project awards. Higher sales in September and October helped reverse the drag on investment building prices. The NBK investment building price index recovered to 11.1 in October, down a mere.3% y/y (Chart ). This is a vast improvement from the double digit declines to the tune of 1% y/y on average witnessed earlier this year and in late 1. Commercial sector activity bounced back quickly in October following a short lull in market activity. A total of 7 sales took place in the commercial sector, worth a combined KD. million, up from the previous month s KD 7. million (Chart ). The largest transaction that took place was a KD 9. million commercial plot in Sharq. 1 Oct-1 Apr-1 Oct-1 Apr-1 Oct-1 Apr-17 Oct-17 Source: Ministry of Justice 1 1 Chart : Residential real estate sales Oct-1 Apr-1 Oct-1 Apr-1 Oct-1 Apr-17 Oct-17 Source: Ministry of Justice, NBK estimates Chart 3: Residential real estate price indices 1 1 1 1 1 (index, 3-month moving average, 1=1) Source: Ministry of Justice, NBK estimates Sales (KD mn, LHS) KD mn, monthly, 3MMA (RHS) Residential Home Residential Land 1 1 1 Oct-1 Oct-13 Oct-1 Oct-1 Oct-1 Oct-17 1 1 1 1 1 NBK Economic Research, T: (+9) 9, F: (+9) 973, econ@nbk.com, 17 NBK, www.nbk.com 1

Kuwait Economic Brief - December 17 Table 1: Real estate sales Monthly average 17 Oct 17 1 1 Aug Sept Oct %m/m %y/y Sales (KD mn) 3. 19 1. 1. 1.9.7.1 Residential property 113. 79 7..3 11.3 1. 3. Investment property 1. 3...1-11.. Commercial property 37.9. 7...1 3.1 Number of transactions 3 3 9.1 3. Residential property 33 37 17 7 37 7.. Investment property 1 1. -1.9 Commercial property 1 1 7. 1.7 1 1 Chart : Investment real estate sales Sales (KD mn, LHS) KD mn, monthly, 3MMA (RHS) 1 1 Transaction size (KD ) 7 1.1 93.. -. 1. Residential property 3 33 39.7 39. 3.9 -.3-1. Investment property 1. 11. 99.1-13.9. Commercial property,1, 3 7,, -11. 9.7 Source: Ministry of Justice Note: Our real estate indexes database comprises, transactions. Each index combines monthly average prices (per sqm when possible) in select, more active, areas of Kuwait; it is then adjusted for volatility. The indexes are based in 1, i.e. 1 price index equals 1. The indexes are not adjusted for seasonality nor for number of business days. They also do not cover the commercial sector. Oct-1 Apr-1 Oct-1 Apr-1 Oct-1 Apr-17 Oct-17 Source: Ministry of Justice, NBK estimates 3 1 Chart : Investment building price index (index, 3-month moving average, 1=1) 3 1 19 17 1 13 11 19 17 1 13 11 9 9 Oct-1 Oct-13 Oct-1 Oct-1 Oct-1 Oct-17 Source: Ministry of Justice, NBK estimates 1 1 1 1 Chart : Commercial real estate sales (KD million) Sales (KD mn, LHS) KD mn, monthly, 3MMA (RHS) 1 1 1 1 Oct-1 Apr-1 Oct-1 Apr-1 Oct-1 Apr-17 Oct-17 Source: Ministry of Justice, NBK estimates NBK Economic Research, T: (+9) 9, F: (+9) 973, econ@nbk.com, 17 NBK, www.nbk.com 11

Kuwait Economic Brief - December 17 Corporate earnings Improved corporate earnings still signaling some softness > Hiba Koraytem Senior Economist +9 9 33, hibakoraytem@nbk.com > Nemr Kanafani Senior Economist +9 9 3, nemrkanafani@nbk.com Listed Kuwaiti companies continued to post a notable rise in profits for the first nine months of 17, though softness in business activity has affected revenue growth. The financial sector was the main contributor to the solid growth, with investment income benefiting from the stock market rally. Although results in other sectors continued to reflect a more lackluster operating environment, moderation in the consumer sector was visible in company results.. 1. 1. Chart 1: Profits and losses (KD million ) Profits Losses. 1. 1. Earnings of listed corporates were up 1% y/y during the first nine months of the year. The aggregate profits of 1 reporting companies, out of 13 Kuwaiti companies listed on Boursa Kuwait, rose to KD 1.3 billion. There was also a significant drop in aggregate losses, which shrank by % y/y to KD 3 million; still, the number of loss-making companies was steady at 37. The financial services sector benefited from the stock market rally this year. Boursa Kuwait s weighted index was up 9% during 3Q17, as the market benefited from the Zain acquisition by Omantel and the upgrade of Kuwait s market to emerging by FTSE. Non-bank financial service companies with large exposures to the local market made strong gains on their investment portfolios. Total profits for this sector quadrupled to KD 131 million in 3Q17, up from KD million in 3Q1. The strong results of the sector were broad-based. The number of loss-making companies dropped notably compared to 3Q1 with % of reporting companies seeing an improvement in earnings. Banks were the second largest contributor to profit growth in 3Q17. Profits for the sector rose a good 7% to KD 9 million. Most banks contributed to the growth, with only one bank seeing declines in earnings. While growth came primarily from investment gains, net interest income also supported the sector s profitability..... -. -. 9M1 9M13 9M1 9M1 9M1 9M17 Source: Boursa Kuwait Chart : Profits by sector Banks* % Telecommunication 1% Industrials 9% Consumer 3% Real Estate 7% Financial Services Other 13% 1% Source: Boursa Kuwait Industrial companies were another main contributor to profit growth. The sector s profits were up % in 3Q17. Gains from the sector were concentrated in two main companies, with others posting mixed to flat results. Real estate companies have also done well, benefiting from the pickup in activity in the sector in 17. The real estate market witnessed a slow and orderly correction in activity and prices in tandem with the declining oil prices between Q1 and Q1. Since then, the pickup in the sector s activity and stabilization in real estate prices help push profits of real estate companies up % y/y in 3Q17. The consumer sector was a clear exception to the positive outcome, with results still reflecting a moderating operating environment. Although profits for the consumer sector were down 11% y/y, only a third of the companies saw declines in earnings. This is in line with the slight improvement that was witnessed in consumer sector data recently. In fact, consumer spending, imports of consumer goods, consumer confidence and household debt have all improved somewhat in 3Q17. NBK Economic Research, T: (+9) 9, F: (+9) 973, econ@nbk.com, 17 NBK, www.nbk.com 1

Kuwait Economic Brief - December 17 Table 1: Profits by sector (KD million) Net profits Growth 9Q1 9Q17 % y/y Banks* 37 7 7.1 Basic Materials 1 3.1 Consumer Goods 3-11. Consumer Services 3 31-9.9 Financial Services 7 131 391.9 Healthcare 39. Industrials 133 1.1 Insurance 19 31.7 Oil & Gas. Real Estate 93 11.1 Technology -.1 Telecommunications 1 1-1.3 Total 1,13 1,3 17. Source: Boursa Kuwait * Adjusted for NBK s consolidation of Boubyan Bank. NBK Economic Research, T: (+9) 9, F: (+9) 973, econ@nbk.com, 17 NBK, www.nbk.com 13

Kuwait Economic Brief - December 17 Corporate earnings, 9 months (KD thousand) Code Company name 9 months Growth Banks 1 17 % 11 National Bank of Kuwait 19, 3,31 9 1 Gulf Bank 3,1 3,17 1 13 Commercial Bank of Kuwait 7,9 1,39-7 1 Al-Ahli Bank of Kuwait 19,3,9 1 1 Ahli United Bank (Kuwait) 39,13, 1 Kuwait International Bank 13,77 13,... 17 Burgan Bank,1 3,9 11 1 Kuwait Finance House 13,13 137, 1 19 Boubyan Bank 9,7 3, 1 1 Ahli United Bank 13, 1,313 Ithmaar Bank 1,91 -,171 1 Warba Bank 77,7 Basic Materials 11 Kuwait Foundry 1,3,73 37 1 Boubyan Petrochemical Co....... 17 Al-Kout Industrial Projects Co.,, 31 Qurain Petrochemical Industries 1, 1,1 1 Consumer Goods 19 Kuwait Slaughter House... National Slaughter House -... 37 Palms Agro Production Co. 7-9 71 Livestock Trading & Transport Co.,1,7-7 Danah Alsafat Foodstuff Co.,11-1,171 73 Kuwait United Poultry Co. 91... 7 Kuwait Food Co. (Americana),9,9... 3 Mezzan Holding Co 13,11 1,1-3 Consumer Services 1 Kuwait National Cinema 7,9,93 19 Kuwait Hotels Co. 9 3-93 1 Sultan Center Food Products Group 1,,191 1 1 Kuwait Cable Vision Co. -17-11 Eyas for Higher & Technical Education Co.,7... 3 IFA Hotels & Resorts 17-1 Oula Fuel Marketing Co.,99 3,133 1 Kuwait Resorts Co. 1,99 1,3 - Jazeera Airways Co. 1,11 9, -1 Soor Fuel Marketing Co., 3,13 7 7 Future Kid Entertainment & Real Estate Co. 1, 1, - Al-Rai Media Group Co.,91 1,9-9 1 Zima Holding Co. 7-7 United Foodstuff Industries Co.... Financial Services 1 Kuwait Investment Co. 1,93 1,1 737 Commercial Facilities Co.,1 7,3 3 3 International Financial Advisors Co. -, 1, National Investments Co. 1,3 9,3 Kuwait Projects Company (Holding),,3-7 Coast Investment & Development 1,111-9 Securities House -71 11 Securities Group 1,3... 1 Arzan Financial Group for Financing and Investment 1,9, 13 Kuwait Financial Centre 1,31,3 3 1 Kuwait & Middle East Financial Investment (KMEFIC) -3,3-9 1 Al-Aman Investment -31 1 19 First Investment Co. 71-3 Al-Mal Investment Co. -1,11-1,3 1 Gulf Investment House -1-1, Aayan Leasing & Investment 1,,99 3 3 Bayan Investment Co. -73 7 Osoul Investment Co. 3 1,1 3 7 Kuwait Finance & Investments Co. 99 3 KIPCO Asset Management Co. 9 997 1 31 National International Holding Co.,9 1,3-7 3 Housing Finance 7 1, 33 Al-Madar Finance & Investment -1,17-1,93 3 Al-Deera Holding Co. -9 3 Al-Salam Group Holding Co. -39 37 Ektettab Holding Co. -1-33 NBK Economic Research, T: (+9) 9, F: (+9) 973, econ@nbk.com, 17 NBK, www.nbk.com 1

Kuwait Economic Brief - December 17 Corporate earnings, 9 months (KD thousand) Code Company name 9 months Growth 1 17 % Al-Madina for Finance & Investment 1,3 7-17 1 Noor Financial Investment 7,, Tamdeen Investment 9,19, -1 3 Kuwait Bahrain International Exchange -13... Taiba Kuwaiti Holding Co. 1... Kuwait Syrian Holding Co. 113 9 7 7 Kuwait China Investment Co. -,3 79 9 Gulf North Africa Holding Co. 1 179 9 Amwal International Investment Co. 9 - Al-Imtiaz Investment Group 7,9 33,73 3 3 Safat Global Holding Co....... 3 Manazel Holding Co. -9-1 National Industries Group (Holding) Co. -,7 7,37 9 Boubyan International Industries Holding -17,3-9 11 Al-Arabi Holding Co. -1,7-37 Privatization Holding Co. 1, 3,9 19 31 Credit Rating and Collection Co. -91 3 3 Jeeran Holding Co. 3... 11 Egypt Kuwait Holding (US$) 1,9 1,339 71 13 Gulf Finance House 1,1 17 Inovest,7,7 1 Health Care 3 Al-Mowasat Holding,73... Advanced Technology Co. 3,,3 39 3 Yiaco Medical Company -,... Industrials 3 Kuwait Cement 1,7 1, -19 Refrigeration Industries,7... Gulf Cable & Electrical Industries,339 7,13 3 Heavy Engineering Ind. & Shipbuilding,7,3-1 Kuwait Portland Cement,97,199 3 9 Shuaiba Paper Products 1,3 1, -11 1 Metal & Recycling 1-1 1 Aerated Concrete Industries,3,93-1 1 Gulf Glass Manufacturing 1,... 1 Al-Hilal Cement - -7 19 Kuwait Building Materials Manufac....... National Industries Co. for Bldg. 3,97 1,93 - Equipment Holding -,93-3,39 National Co. for Consumer Industries 19 9-71 Kuwait Gypsum Manuf. & Trading 1 17-1 7 Salbookh Trading Co. 73-1 3 Agility 3,3 9,19 1 7 Educational Holding Group...... 9 National Cleaning Co. 71 93 1 Kuwait & Gulf Link Transport Co. 1,7 3, 1 1 Kuwait Co. For Process Plant Cons.& Cont. 1, 17 3 Human Soft Holding 1,19 19,39 17 Nafais Holding Company,97 9,3 1 Safwan Trading & Contracting...... 3 Gulf Franchising -1 1 3 National Ranges Co. -,7-1,7 3 Combined Group Contracting 1,117 1,99 7 39 Mushrif Trading & Contracting...... United Projects Group,13, 11 Aviation Lease & Finance 1,73 3,1 133 Mubarrad Transport Co. 91,3 11 KGL Logistics Company,3, Sharjah Cement & Industrial Dev. 3,3 3,7 9 Gulf Cement,,73 7 Umm Al-Qaiwain Cement Industries 1,9 1,39-7 Fujairah Cement Industries 3,7, -1 Ras Al-Khaimah for White Cement 1,9 1,31-9 Insurance 31 Kuwait Insurance Co. -73 7,3 3 Gulf Insurance Co. 1,,3-33 Al-Ahleia Insurance Co.,13 7,93 1 3 Warba Insurance Co. -,97 3 Kuwait Re-Insurance Co. 33,71 1,91 3 First Takaful Insurance Co. 9,37 11 37 Wethaq Takaful Insurance Co. 7 17-77 1 Kuwait Bahrain Insurance Co.,17 1,9-1 NBK Economic Research, T: (+9) 9, F: (+9) 973, econ@nbk.com, 17 NBK, www.nbk.com 1

Kuwait Economic Brief - December 17 Corporate earnings, 9 months (KD thousand) Code Company name 9 months Growth 1 17 % Oil & Gas 7 Contracting & Marine Services Co. 79... Ikarus Petroleum Industries -1,13... Safat Energy Holding Co. -3, -97 Independent Petroleum Group 3,97, 17 National Petroleum Services Co.,71 7,99 7 The Energy House Co. -3,99-3,7 9 Gulf Petroleum Investment,3-3,31 33 Burgan Co. for Well Drilling 1,1... Real Estate 39 Sokouk Holding -,1 1 Kuwait Real Estate,7, - United Real Estate,91-9 3 National Real Estate 11,9 1,7 13 Salhia Real Estate, 11, 37 Al-Tamdeen Real Estate,1,9 3 Ajyal Real Estate Entertainment Co.,3 3, 9 Al-Massaleh Real Estate Co. -171-1, 1 Arab Real Estate -,1 -, 1 Enma'a Real Estate 13 Mabanee Co. 3,77 3,7 1 1 Injazzat Real Estate Development, 3,9 3 1 Investors Holding Group -1-11 17 International Resorts Co. -73 7 1 Commercial Real Estate Co.,33 11,1 3 19 Sanam Real Estate Co. -1-9 A'ayan Real Estate Co. 1,17 1,19... 1 Aqar Real Estate 93 1,9 1 Kuwait Real Estate Holding 3 3 Al Mazaya Holding,37,7 1 Al Dar National Real Estate -13... Al-Themar International Holding -33... 7 Tijara & Real Estate Investment 9 3 - Tameer Real Estate Investment - - 9 Arkan Al-Kuwait Real Estate,77,911 31 Al-Argan International Real Estate 1,1,79 33 3 Abyarr Real Estate Development Co. -1,19-1,71 33 Munshaat Real Estate Projects Co. -,93,1 3 First Dubai For Real Estate Development,1 1,7-1 3 Kuwait Business Town real estate 1,1 1, 3 37 Real Estate Asset Managemnet Co - Ream 9 77 1 3 Mena Real Estate Co. -1-1 39 Al Mudon International Real Estate -7-1 Real Estate Trade Centers -7-3 1 Kuwait Remal Real Estate -7-79 Mashaer Holding Co. -19 Technology 1 Automated Systems Co. 1,31 1,3 3 Al-Safat Tec Holding Co.,17 9-1 7 Future Communications 31... 9 Hayat Communication Co. 9... Telecommunication Zain Kuwait 1,7 1, - 13 Wataniya 3,1 3,7 1 Nibras Holding Co -1,1 Kuwait Telecommunication Company 9,,77-3 NBK Economic Research, T: (+9) 9, F: (+9) 973, econ@nbk.com, 17 NBK, www.nbk.com 1

Kuwait Economic Brief - December 17 Stock market Government s resignation weighs on Boursa in November > Hiba Koraytem Senior Economist +9 9 33, hibakoraytem@nbk.com > Nemr Kanafani Senior Economist +9 9 3, nemrkanafani@nbk.com The resignation of Kuwait s government early in the month took its toll on the equity market in November, with the Saudi anticorruption drive later in the month also weighing on prices. This was only partly offset by Omantel s acquisition of an additional 1.1% stake in Zain, which provided some support to the market at mid-month. By contrast, and despite 1% y/y growth in 3Q17, corporate earnings appeared to have little positive impact. The market lost % of its capitalization in November, to end the month at KD 7. million. 3 Chart 1: Boursa Kuwait Value of traded shares (KD mn, LHS) KSE price index (RHS) 7 7 The price and weighted indices both retreated by % on the month, with most sectors seeing declines. The hardest hit were consumer goods and banks, which fell by 1.7% and.%, respectively. Financial sectors also failed to end the month in positive territory, despite positive financial results. Meanwhile, trading volumes continued to retreat. The average daily traded value declined to KD 1. million in November, down 3% on the month. Foreign buying in November continued to edge lower to a 3-month moving average of 1.% but still compared well to its average in the first three quarters of the year. 1 Nov-1 Feb-17 May-17 Aug-17 Nov-17 Source: Thomson Reuters Datastream, Boursa Kuwait 1 1 13 Chart : Regional markets MSCI Kuwait MSCI GCC MSCI Emerging MSCI World (rebased indexes) 1 1 13 1 11 1 9 1 11 1 9 Nov-1 Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Source: Thomson Reuters Datastream Chart 3: GCC markets & oil 1 1 Brent Price ($/barrel, LHS) MSCI GCC Total Return Index (RHS) 1 1 Nov-1 May-1 Nov-1 May-17 Nov-17 Source: Thomson Reuters Datastream NBK Economic Research, T: (+9) 9, F: (+9) 973, econ@nbk.com, 17 NBK, www.nbk.com 17

Kuwait Economic Brief - December 17 13 13 1 1 11 11 1 1 Chart : Market indexes (rebased indexes) Price index Value weighted 13 13 1 1 11 11 1 1 9 9 Nov-1 Feb-17 May-17 Aug-17 Nov-17 Source: Thomson Reuters Datastream, Boursa Kuwait Chart : Foreign buyers (% y/y, 3mma) 1 1 1 1 1 1 1 1 1 1 Nov-1 Feb-1 May-1 Aug-1 Nov-1 Feb-17 May-17 Aug-17 Nov-17 Source: Boursa Kuwait Table 1: Boursa Kuwait performance by sector, November 17 Change % Price Weighted Market % of Trading activity Price to Price index Weighted index index index cap (KD mn) Market (daily avg.) earnings* 3-Nov 3-Nov m/m YTD m/m YTD 3-Nov mn shares mn KD 3-Nov Total market 197 399 -.9 7. -..9 7,3 1.%. 1. 1. Banks 7 7 -..7 -. 1. 13, 9.% 19. 7. 1. Basic materials 137 7-3. 3.1 -. 9. 79.%..3. Consumer goods 77-1. -. -1.7-3. 91 3.%..1 1. Consumer services 9 99-1. -. -.3 1.3 7.7%.7.. Financial services 33 -..9 -. -.,9 9.% 3..7 17.9 Healthcare 111 3. 1...1 37.9%......... Industrials 17 71-3..9 -..7 3,37 1.%. 1.9 1. Insurance 13 91 -.9.9 -.3-1. 3 1.%.1. 1. Oil & gas 91 7 -.. -.9 3..9%.. Real estate 79 -. 1. -. -.,77 7.% 1. 1. 17. Technology 99 1-9.9-17. -1. -. 3.1%.1. Telecommunications 7 33-3.7-1. -.1., 1.3%.9. 11.9 Parallel 11 373-7.1-7.9-1.9 -.1 Source: Boursa Kuwait, Thomson Reuters Datastream * PE is calculated using market cap as of month close and latest 1 months trailing earnings. NBK Economic Research, T: (+9) 9, F: (+9) 973, econ@nbk.com, 17 NBK, www.nbk.com 1

Head Office International Network NBK Capital Kuwait National Bank of Kuwait SAKP Abdullah Al-Ahmed Street P.O. Box 9, Safat 131 Kuwait City, Kuwait Tel: +9 11 Fax: +9 9 Telex: 3-1 NATBANK www.nbk.com While every care has been taken in preparing this publication, National Bank of Kuwait accepts no liability whatsoever for any direct or consequential losses arising from its use. Kuwait Economic Brief is distributed on a complimentary and discretionary basis to NBK clients and associates. This report and previous issues can be found in the Reports section of the National Bank of Kuwait s web site. Please visit our web site, www.nbk.com, for other bank publications. For further information please contact NBK Economic Research at: Tel: (9) 9 Fax: (9) 973 Email: econ@nbk.com Bahrain National Bank of Kuwait SAKP Zain Branch Zain Tower, Building 1, Road, Seef Area, P.O.Box 9, Manama, Kingdom of Bahrain Tel: +973 17 1 Fax: +973 17 1 National Bank of Kuwait SAKP Bahrain Head Office GB Corp Tower Block 3, Road Building 111 P.O. Box 9, Manama Kingdom of Bahrain Tel: +973 17 1 Fax: +973 17 1 Jordan National Bank of Kuwait SAKP Amman Branch Shareef Abdul Hamid Sharaf St P.O. Box 9197 Shmeisani, Amman 1119 Jordan Tel: +9 Fax: +9 1 Saudi Arabia National Bank of Kuwait SAKP Jeddah Branch Al Khalidiah District, Al Mukmal Tower, Jeddah P.O Box: 13 Jeddah 1 Kingdom of Saudi Arabia Tel: +9 3 3 Fax: +9 3 31 Lebanon National Bank of Kuwait (Lebanon) SAL BAC Building Justinian Street, Sanayeh P.O. Box 11-77, Riyad El Solh Beirut 117, Lebanon Tel: +91 1 797 Fax: +91 1 77 Iraq Credit Bank of Iraq Street 9, Building 17 Sadoon Street, District 1 P.O. Box 3 Baghdad, Iraq Tel: +9 1 7119/71919 +9 1 71/717173 Fax: +9 1 7171 Egypt National Bank of Kuwait - Egypt Plot 1, City Center, First Sector th Settlement, New Cairo Egypt Tel: + 193 Fax: + 13397 United Arab Emirates National Bank of Kuwait SAKP Dubai Branch Latifa Tower, Sheikh Zayed Road P.O. Box. 993, Dubai UAE Tel: +971 311 Fax: +971 3 National Bank of Kuwait SAKP Abu Dhabi Branch Sheikh Rashed Bin Saeed Al Maktoom (Old Airport Road) P.O. Box 1137 Abu Dhabi, U.A.E Tel: +971 199 Fax: +971 77 United States of America National Bank of Kuwait SAKP New York Branch, 99 Park Avenue New York, NY 1171, USA Tel: +1 1 33 9 Fax: +1 1 319 9 United Kingdom National Bank of Kuwait (International) Plc Head Office, 13 George Street London W1U 3QJ, UK Tel: + 7 77 Fax: + 7 11 National Bank of Kuwait (International) Plc Portman Square Branch 7 Portman Square London W1H NA, UK Tel: + 7 77 Fax: + 7 377 France National Bank of Kuwait (International) Plc Paris Branch 9 Avenue des Champs-Elysees 7 Paris, France Tel: +33 1 9 Fax: +33 1 9 3 Singapore National Bank of Kuwait SAKP Singapore Branch 9 Raffles Place # -1 Republic Plaza Singapore 19 Tel: + 3 Fax: + 3 China National Bank of Kuwait SAKP Shanghai Representative Office Suite 13, 1th Floor, Azia Center 133 Lujiazui Ring Road Shanghai 1, China Tel: + 1 19 Fax: + 1 7 111 Kuwait NBK Capital 3th Floor, Arraya II Building, Block, Shuhada a Street, Sharq P.O. Box 9, Safat 13 Kuwait Tel: +9 9 Fax: +9 9 / United Arab Emirates NBK Capital Limited - UAE Precinct Building 3, Office Dubai International Financial Center Sheikh Zayed Road P.O. Box, Dubai United Arab Emirates Tel: +971 3 Fax: +971 3 Associates Turkey Turkish Bank Valikonagl CAD. 7 Nisantasi P.O. Box 3371, Istanbul, Turkey Tel: +9 1 373 373 Fax: +9 1 33 Copyright Notice. Kuwait Economic Brief is a publication of National Bank of Kuwait. No part of this publication may be reproduced or duplicated without the prior consent of NBK.