New Transportation market report from Business Monitor International: "Kuwait Autos Report Q4 2013"
Boston, MA -- (SBWIRE) -- 10/21/2013 -- Kuwait continues to represent one of the more attractive autos markets of the Gulf region, as it has positive growth potential in both the volume and high-end segments. As such, BMI remains upbeat on the outlook for the Kuwaiti new vehicle sales market, with the country offering strong growth potential in both the volume and high-end segments. In H113, new car sales were reportedly up by 8%. This bodes well for BMI's forecasts for total new vehicle sales to rise by 9.1% over the full year.
Looking forward, we believe that strong annual growth (in the order of 8-10%) can continue over the remainder of our forecast period to 2017.
Continuing to support our upbeat stance towards Kuwaiti auto sales is a positive economic backdrop. For 2013, BMI is targeting relatively strong GDP growth of 3%, slowing slightly to 2.6% growth in 2014, with non-oil economic activity set to expand on the back of solid levels of household expenditure and robust private consumption. Further support will be given by continued supportive fiscal and monetary conditions.
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The outlook for private consumption continues to be broadly positive, with BMI forecasting growth of 3.5% over 2013 and 3% in 2014. Fiscal policy will remain expansionary, although we expect a deceleration in current expenditure growth following the 25% hike in public sector salaries in March 2012. The recently dissolved parliament pushed through a series of stimulatory measures over the first half of 2013, including legislation aimed at providing Kuwaiti nationals with greater access to housing loans, and a KWD744mn (US$2.6bn) consumer debt relief programme. Although these moves are adding to the overall debt burden faced by the country, this effective bailout for consumers should act as a short-term stimulus to household expenditure and, by extension, demand for new vehicles.
The interest rate environment also remains broadly favourable for those Kuwaitis needing to finance new car purchases via loans. The Central Bank of Kuwait has kept the key discount rate at 2% since October 2012, with inflation set to remain subdued, at an annual average rate of 3% in 2013, according to BMI forecasts. Consumer credit is still the main driver of the overall expansion in lending, growing by 17.9% year-on-year (y-o-y) in April. BMI retains the view that Kuwaiti banks should see stronger lending activity than in the past few years, and will be able to benefit from solid household expenditure and the ongoing expansion of non-oil economic activity.
Lastly, ongoing efforts to improve Kuwait's business environment and invest more in capital infrastructure - including planned new airport terminals and ports - could well help to drive domestic commercial vehicle sales upwards as well.
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