Speaking at the MEED Kuwait Projects 2009 conference in Kuwait City, Sami Alanbaee, manager of the Central Bank of Kuwait’s economic research department and Randa Azar-Khoury, group chief economist at the National Bank of Kuwait, said falling oil prices and production, and the global financial crisis would cause the economy to shrink.

Alanbaee and Azar-Khoury predicted inflation levels of 5-6 per cent in 2009-2010, down from 11.6 per cent in 2008-2009.

Alanbaee says he expects the economy to shrink by 3.4-4 per cent over the coming year.

Gross domestic product (GDP) in 2008-2009 was more than KD41bn ($140bn), according to Alanbaee.

Both economists attributed the fall in these key economic indicators to the global financial crisis, and its impact on prices and demand for oil alongside Kuwait’s commitment to cut its oil production by about 10 per cent from 2008 levels in line with Opec production quotas.

Kuwait’s non-oil sector will continue to grow in 2009-2010, said Alanbaee. “The negative growth is in the oil sector,” he said. “The non-oil sector in real terms will see very modest growth of around 2.5 per cent.”