Rapid vaccine rollout to underpin economic recovery

Rapid vaccine rollout to underpin economic recovery

KUWAIT CITY: Economic activity is estimated to have declined by 6.6% in 2020, refl ecting a drop in both non-oil GDP (roughly 70% of total GDP) by -5.1% on COVID-19 fallout and the oil sector by -8.5% due to OPEC+ production cuts.Total GDP contracted in 1H20 by 3.9% y/y as non-oil GDP fell by 6.0%, at a time where movement restrictions and health-related closures were more prevalent, hurting the hospitality, transportation, and wholesale and retail trade sectors (about 30% of GDP).Vaccination deployment, with more than half of the population (52%) covered by mid-March, boosts re-opening and reduces pressures on key sectors.As such, the recovery in 2021 could come from a rebound in the tourism and hospitality sector, although the extent of this recovery hinges on global recovery.Non-oil GDP is expected to grow 3.3% in 2021 and 3.5%over the medium term, on average, benefiting from Expo 2020 and the recovery in global demand.Oil GDP could decline 2.9% in 2021 as oil production is expected to reach 2.7mb/d due to the OPEC+ agreement. In the medium term, oil GDP could grow by 5% as output cuts are eased and refining capacity are expanded (Ruwais and Jebel Ali refinery upgrades and BPGIC's Phase