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Kuwait

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Economic and political overview

Economic Overview

Kuwait is a wealthy country with a well-developed welfare state, providing its nationals with a very high per capita income. However, the country's long-term economic outlook remains heavily dependent on hydrocarbon revenues. While the Kuwait Investment Authority’s (KIA) significant foreign assets help maintain macroeconomic stability, they are not enough to fully offset the impact of global oil market volatility and the anticipated decline in long-term oil demand. In 2023, Kuwait's real GDP contracted by 3.6%, driven by a 4.3% decline in the oil sector due to OPEC+ production cuts, compounded by a 1.0% contraction in the non-oil sector, primarily due to reduced manufacturing activity. In 2024, real GDP contracted by an additional 2.8% as OPEC+ production cuts continued, but the economy is projected to grow by 2.6% in 2025 as these cuts are gradually reversed, with growth aligning closely with potential thereafter. The non-oil sector is beginning to recover, and in 2024, it expanded by an estimated 2.0%, supported by rising real credit growth despite fiscal consolidation. Over time, non-oil GDP growth should gradually converge to its potential of 2.5% (IMF).

Concerning public finances, the fiscal deficit of the budgetary central government is expected to rise to 6.6% of GDP in FY2024/25, as lower oil revenue outweighs expenditure rationalization. The deficit is then projected to increase by around 1% of GDP per year over the medium term, as the decline in oil revenue continues to outpace expenditure adjustments under current policies. The low government debt is anticipated to gradually reach 25% of GDP over the medium term, assuming the enactment of the Financing and Liquidity Law in FY2024/25, driven by the goal of developing the sovereign debt market (IMF). The country’s external balance sheets remain among the strongest globally. According to Fitch Ratings, Kuwait's sovereign net foreign assets increased to 538% of GDP in 2024 and are expected to average 553% in 2025-2026. Headline CPI inflation moderated to 3.0% in 2024, down from 3.6% the previous year, as excess demand pressure eased and imported food prices fell. Inflation is expected to gradually converge to 2.0% as the non-oil output gap closes (IMF).

Employment in Kuwait rose by 7.5% in 2023, reaching 2.1 million, driven by a 9.0% increase in expatriate workers to 1.7 million. However, employment growth slowed to 2.5% (y-o-y) in 2024Q2, down from 4.7% (y-o-y) in 2023Q4, reflecting a deceleration in expatriate employment growth (IMF). According to the latest data from the Public Authority for Civil Information, Kuwait’s private sector workforce decreased by 1,475 employees, from 72,231 in December 2023 to 70,756 in December 2024. Meanwhile, government employment increased by 3,125, reaching 400,815 employees. Unemployment among Kuwaiti citizens stood at 33,307 by the end of 2024. It's important to note that comparing unemployment rates in Kuwait with those in developed countries requires consideration of Kuwait's unique context, where unemployment often correlates with awaiting nominations from the Civil Service Commission, especially for Kuwaiti graduates seeking public sector positions.

 
Main Indicators 2024 (E)2025 (E)2026 (E)2027 (E)2028 (E)
GDP (billions USD) 158.57153.10155.96162.34169.17
GDP (Constant Prices, Annual % Change) -2.81.93.12.32.2
GDP per Capita (USD) 31,64129,95129,91130,52531,185
General Government Gross Debt (in % of GDP) 3.07.410.815.319.4
Inflation Rate (%) 2.92.52.22.01.9
Current Account (billions USD) 46.7234.7830.1429.0828.44
Current Account (in % of GDP) 29.522.719.317.916.8

Source: IMF – World Economic Outlook Database , Latest data available

Country Risk

See the country risk analysis provided by La Coface.

 

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Main Sectors of Industry

Agriculture is very limited in the country due to the lack of water and fertile land. The primary sector is constituted mainly by fishing activities and contributed only 0.5% to the GDP, employing 1.9% of the workforce (World Bank, latest data available). Kuwait's agricultural regions are situated in Wafra to the south, Al-Abdali to the north, and Al-Sulaibiya in the centre. The primary crops cultivated in Kuwait include vegetables, potatoes, and grains, constituting the majority of the country's agricultural output. Despite geographic and political challenges limiting Kuwait's agricultural sector to a minor role in the economy, both private companies and the public sector are investing in new technologies to enhance production.

The industrial sector contributes 45.4% of GDP and employs 24.9% of the total workforce (World Bank). With 104 billion barrels of oil in reserve (i.e. 6% of the world's total and representing 100 years of production), the country's industry is based on oil exploitation. This sector accounts for nearly half of Kuwait’s GDP, around 95% of exports, and approximately 91% of government revenue (OPEC, 2023). By 2030, Kuwait is planning to invest more than USD 87 billion in the oil sector, especially in creating new oil refineries. The manufacturing sector is still underdeveloped, accounting for only 8% of GDP. Kuwait's oil product output and exports reached record highs in 2024, driven by the full ramp-up of the 615,000 b/d Al-Zour refinery. According to figures from the Joint Organisations Data Initiative (JODI), Kuwait's refinery production—excluding LPG—averaged 1.21 mn b/d last year, marking a 22% increase from 2023. Fuel oil production saw a significant rise of 51% year-on-year. The record output also led to all-time high refined product exports, which grew by 28% to an average of 968,000 b/d. Fuel oil exports surged by 44%, while gasoil exports increased by 40%.

The services sector represents more than half of the GDP and employs 73% of the active population (World Bank). The most important sub-sectors are real estate and financial services. 10 banks are active in the country, with adequate capital, good funding and liquidity, and strong risk-management practices (Fitch Ratings). According to GlobalData's projections, Kuwait's telecom service revenue is anticipated to increase from USD 2.1 billion in 2022 to 2.5 billion by 2027. This growth is expected to be mainly driven by revenue generated from the mobile data and fixed broadband segments. Tourism in Kuwait is expanding, with official data from the Central Bank of Kuwait showing that visitors spent approximately KD 505.7 million in the first nine months of 2024. This represents a 28.2% annual increase, equating to an additional KD 111.3 million compared to the KD 394.4 million spent during the same period in 2023.

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 1.9 24.9 73.1
Value Added (in % of GDP) 0.5 57.1 55.9
Value Added (Annual % Change) 3.6 -5.2 1.7

Source: World Bank - Latest available data.

 
Monetary Indicators 20202021202220232024
Kuwaiti Dinar (KWD) - Average Annual Exchange Rate For 1 USD 0.310.300.310.310.31

Source: World Bank - Latest available data.

 

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Foreign Trade

Kuwait is highly dependent on foreign trade, which represents 91% of its GDP (World Bank, latest data available). As the fourth-largest OPEC oil producer, Kuwait's export earnings mainly come from mineral fuels, oils, and distillation products, which account for over 95% of total exports and almost 50% of the GDP. On the other hand, the country relies particularly on imports of food products, consumer goods, and semi-finished products. Imports have increased rapidly in recent years due to the country's undertaking of large projects and high private consumption demand. In 2023, imports were led by cars (11.8%), petroleum gas (6.0%), broadcasting equipment (3.6%), packaged medicaments (3.0%), and jewellery (2.9% - data OEC).

Kuwait exports to a wide number of countries, with the main ones in 2023 being China (24.5%), India (13.4%), Japan (12.9%), Chinese Taipei (6.7%), and the United Kingdom (4.7%). In the same year, Kuwait's largest suppliers were China (17.6%), the United Arab Emirates (9.9%), the United States (9.2%), Saudi Arabia (5.6%), and Japan (5.5% - data OEC). Kuwait permits duty-free entry of GCC goods that meet origin criteria. To qualify for preferential duty status, a product must have at least 40% of its value-added within a GCC member country. Additionally, for industrial firms benefiting from this preference, at least 51% of their capital must be owned by GCC citizens. Kuwait has also endorsed the World Trade Organization Trade Facilitation Agreement, which aims to streamline customs and border procedures, enhance transparency and information accessibility, and reduce trade costs.

The country's exports largely depend on its oil output and global oil prices, and Kuwait has been recording trade surpluses since 1993. In 2023, the export of goods decreased to USD 85.4 billion (-14.5% y-o-y) amid lower hydrocarbon prices, while imports stood at USD 37.3 billion (+8.1%). Kuwait has a structurally positive trade balance; however, the country is a net importer of services, with USD 11.5 billion in exports against USD 29.1 billion in imports in 2023. Preliminary data from the Central Statistical Bureau shows that the country's trade surplus reached KWD 11.6 billion in 2024, with total trade exchange amounting to KWD 34.99 billion, exports at KWD 23.3 billion, and imports at KWD 11.68 billion. Oil exports accounted for 90.6% of Kuwait’s total exports, while non-oil exports rose by 17%. The value of re-exports also saw a significant increase of 47%.

 
Foreign Trade Values 20202021202220232024
Imports of Goods (million USD) 27,73831,88934,56837,49038,242
Exports of Goods (million USD) 40,11663,12899,98583,98175,847
Imports of Services (million USD) 17,17219,94426,13027,85627,015
Exports of Services (million USD) 6,6157,79310,05410,74811,664

Source: World Trade Organisation (WTO) ; Latest available data

Foreign Trade Indicators 20202021202220232024
Foreign Trade (in % of GDP) 82.082.090.9n/an/a
Trade Balance (million USD) 15,41240,55071,95051,14644,048
Trade Balance (Including Service) (million USD) 3,40128,16755,01432,04528,189
Imports of Goods and Services (Annual % Change) -26.43.933.2n/an/a
Exports of Goods and Services (Annual % Change) -2.9-2.313.3n/an/a
Imports of Goods and Services (in % of GDP) 38.330.330.5n/an/a
Exports of Goods and Services (in % of GDP) 43.751.760.4n/an/a

Source: World Bank ; Latest available data

 
International Economic Cooperation
Kuwait is a member of the Gulf Cooperation Council alongside Bahrain, Qatar, Oman, Saudi Arabia and the UAE. The country is also part of the Greater Arab Free Trade Area (GAFTA), a pact of the Arab League entered into force in January 2005 which aims to form an Arabic free trade area.
 

Main Partner Countries

Main Customers
(% of Exports)		 2023
United Arab Emirates 1.5%
India 1.3%
Saudi Arabia 0.8%
China 0.7%
Pakistan 0.4%
See More Countries 95.2%
Main Suppliers
(% of Imports)		 2023
China 19.8%
United States 9.1%
United Arab Emirates 9.0%
Japan 6.1%
India 5.5%
See More Countries 50.4%

Source: Comtrade, Latest Available Data

 

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Political Outline

Current Political Leaders
Emir: Amir MISHAL al-Ahmad al-Jabir al-Sabah (since 16 December 2023)
Prime Minister: AHMAD ABDULLAH Al-Ahmad al Sabah (since 15 May 2024)
Next Election Dates
National Assembly: April 2028
Main Political Parties
While political parties are not formally legal in Kuwait, informal political groupings and parliamentary blocs have developed. These include both religious and secular factions, though many parliamentarians prioritise tribal concerns over ideological affiliations.

Some key organisations include:

- Islamic Constitutional Movement (Hadas): an Islamist political organisation, an offshoot of the Muslim Brotherhood.
- National Islamic Alliance: a Shia political group that opposes corruption.
- National Democratic Alliance: a liberal-leaning political bloc, generally considered centre-left.
- Kuwait Democratic Forum: a secular, left-leaning political group.
Executive Power
The chief of state is the Emir, a hereditary title. While the Emir holds significant executive power, Kuwait operates as a constitutional monarchy. The Emir can dissolve parliament, promulgate laws (subject to parliamentary approval), refer bills back to parliament for reconsideration, and appoint military officers. The Emir appoints the Prime Minister, who serves as the head of government without a fixed term. The Council of Ministers is formed by the Emir in consultation with the Prime Minister. The Emir has the power to dissolve parliament but must call anticipated elections within 60 days.
Legislative Power
Kuwait has a unicameral legislature, the National Assembly, which consists of 50 members elected by popular vote for four-year terms. Government ministers, who may number up to 16, also sit in the Assembly as ex-officio members with voting rights but are not elected. The parliament has the power to dismiss ministers through a no-confidence vote but cannot directly remove the Prime Minister. However, it can trigger political pressure that may lead to their resignation. The parliament can override the Emir’s veto with a two-thirds majority vote.
 

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