Kuwait construction industry grows 2.5% in 2011

 Kuwait's construction industry is expected to grow by 2.5% in 2011 to be worth $2.4bn, according to latest data released by Business Monitor International.

The sluggish growth is set to continue for most of the forecast period taking the industry value to $3.2bn by 2015, BMI said in a report.

"There is little change in Kuwait’s construction industry this quarter, as indicators of sustainable growth remain tentative at best," the report said.

It added that while it believes that Kuwait's economy will be only "minimally impacted" by the tensions across the Middle East, political uncertainty in the Gulf state "posed some threat" to a number of projects the government is hoping to execute via the public private partnership (PPP) model.

"Furthermore, foreign investment remains sluggish as a result of the reduced availability of credit," BMI analysts said.

BMI said it predicts that project developments in Kuwait are likely to see continued delays in the short term.

"Kuwait's plans to invest in infrastructure have nearly all fallen at the same hurdle – mainly due to the transient and overly bureaucratic government," it added.

"This has resulted in significant delays to the procurement and execution of projects. Plans to invest much needed funds into the utilities sector are likely to come up against the same problems."

BMI said it forecast macroeconomic growth to remain robust at 3.4 percent in 2011, averaging four percent through to 2015.

It added that hydrocarbon exports will remain the main contributor to growth, while the five-year Development Plan will drive a gradual uptick in the non-hydrocarbon sector.