Outlook for 2011-15

• The emir, Sheikh Sabah al-Ahmed al-Jabr al-Sabah, will remain the ultimate political authority. Disputes between parliament and the government are likely to persist in 2011-15, hampering progress on economic development.
• The popular uprisings witnessed across the Middle East and North Africa region in early 2011 could spread to Kuwait, but they are unlikely to target the emir, focusing instead on the prime minister and cabinet.
• Relatively high oil prices coupled with a step-up in oil output from 2012 will underpin our forecast of solid fiscal performance in 2011-15, but the surplus will narrow because of higher capital expenditure.
• Kuwaiti interest rates will broadly track the trend in US interest rates over the forecast period, largely because the currency is pegged to a basket of currencies with a heavy US dollar weighting.
• Real GDP growth will pick up in 2011 as oil revenue and production rise, but rising imports will dampen the growth rate. Higher investment and oil output from 2012 will boost annual average GDP growth to just over 5% in 2012-15.
• Inflation is expected to peak at an average of 6.5% in 2011 owing to high commodity prices. It will ease thereafter to an average of 4.3% in 2012-15.
• The current account will record robust surpluses throughout the forecast period owing to strong oil export revenue, which will more than offset rising import costs and deficits on the non-merchandise trade account.

Monthly review

• The emir reappointed Sheikh Nasser Mohammed al-Ahmed al-Sabah as prime minister only days after the government resigned at the end of March in protest at a spate of interpellation motions against ministers by MPs.
• A new cabinet, which is likely to include many of the same faces, is expected to take office in mid-May, leaving only a short time before the National Assembly (parliament) enters its summer recess.
• The opposition has said that it will table new interpellation motions against the prime minister and any other members of the former cabinet that are reinstated.
• Relations with Iran have deteriorated amid regional tensions over the political crisis in Bahrain. Kuwait has expelled three Iranian diplomats and sentenced three alleged members of an Iranian spy network to death.
• The Ministry of Electricity and Water plans to invest US$27bn in new power and water plants. Kuwait Petroleum Corporation has said it might retender the Al Zour refinery and Clean Fuels Project before the end of the year.