Real GDP growth slowed down to +2% y/y in Q4 2018, following +2.9% in Q3 (which was markedly revised upwards from a previous estimate of +1.8%) and a more or less neutral expansion in H1 2018. In 2018 as a whole, the economy grew by a modest +1.2%, equally driven by the hydrocarbon sector (+1.3%) and the non-hydrocarbon sector (+1.2%). Within the latter, the construction (-0.3%), manufacturing (-0.9%) and telecommunication (-10.1%) sectors revealed weaknesses, while hotels & restaurants (+9.4%) and non-financial business services (+6.6%) rose strongly. We expect growth in Q1 2019 to have been subdued as OPEC-agreed oil output cuts from end-2018 held back the energy sector. As these have been relaxed following the decline in Iranian oil exports since this month due to intensified U.S. sanctions, Kuwaiti oil production should pick up for the remainder of the year. Overall, we forecast full-year GDP growth of +1.3% in 2019.
