Economic Overview

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

Kuwait is a very rich country and has developed a welfare state for its nationals, who enjoy a very high per capita income. Kuwait's economic growth was negative at -0.6% in 2019 as lower oil output and weaker oil prices offset the steady expansion of the non-oil sector. Due to the COVID-19 pandemic, it plummeted to -8.9% in 2020 but came back to positive territory at 1.3% in 2021 before reaching over 8.7% in 2022. It was expected to slow down to 2.6% in 2023 and 2024, subject to the post-pandemic global economic recovery (IMF, January 2023). Government spending, employment and credit growth are expected to support economic activity in the short term; nonetheless, this will depend on stable oil prices and higher oil output.

Kuwait’s public finances were relatively healthy in 2020, with a debt-to-GDP ratio of 11.7% that year. Despite the international context created by the COVID-19 pandemic the ratios decrease to only 8.7% in 2021 and 7.1% in 2022. It is expected to remain low with 6.9% in 2023 and 6.5% in 2024. Government spending is also expected to increase in the coming years amid plans to boost credit, employment and wages. At the same time, tax collection remains low as the government has delayed the introduction of a VAT and an excise tax on tobacco and sugary drinks. The excise tax and the VAT are set to be introduced in 2023. Low fiscal revenues combined with reduced oil export earnings, due to falling global oil prices and OPEC oil production in the wake of the Covid-19 pandemic, haven't put pressure on the current account surplus: it went from 3.2% in 2020 to 16.3% in 2021 and 29.1% in 2022. The current account balance is estimated to decrease to 23% in 2023 and 19.8% in 2024 (IMF, January 2023). Inflation ticked up to 3.4% in 2021 from 2.1% a year earlier, and then 4.3% in 2022. It should stabilise at 2.4% in 2023 and 2024 (IMF, 2023). Kuwait's plans to introduce a new debt law continues to be delayed, with the Parliament expected to review the law proposal in the medium term. Contrary to most countries, Kuwait can’t borrow money on international markets, for lack of legislation. A lack of debt law means that the government has been unable to issue debt since October 2017 and had to resort to General Reserves Fund for financing purposes. The continued drawdown from the Fund also weighed on Kuwait Investment Authority's assets - manager of the said fund - despite mandatory transfers from the government to its Future Generations Fund.

Persian Gulf nations, among the world’s richest at the turn of the century, have lost ground as the oil price receded. Bahrain, Kuwait, Oman and Saudi Arabia are all dropping out of the global top 20 as living standards stagnate or decline. Most of the country's wealth is concentrated in the hands of local citizens, while the majority of workers (especially from Asia) live in poor conditions. Unemployment rate is almost non-existent.

The Kuwait Investment Authority’s assets will continue to act as a fiscal backstop. It is the world's oldest sovereign wealth fund. As of April 2022, it was the world's 3rd largest sovereign wealth fund with 738 billion USD in assets under management. As oil export earnings recover in the medium term, underpinned by improvements in global demand conditions, and as concerns over the pandemic wane, the current account balance will continue to expand. A downside risk to this is economic recovery in China, which constitutes 25 percent of Kuwait’s exports (World Bank, 2022).

Foreign Trade

Kuwait is highly dependent on foreign trade, which represented 98 % of the GDP in 2021, the latest World Bank data available. As the fourth largest OPEC oil producer, Kuwait's exports earnings mainly come from mineral fuels, oils and  distillation products (over 95% of total exports and accounting for almost 50% of the GDP). On the other hand, the country depends particularly on imports of food products, consumer goods and semi-finished products. Imports have increased quickly in recent years due to the country’s undertaking of large projects and a high private consumption demand, and for 2022 they were led by motor cars, radio-telephony transmission tools, medicines, electronics equipments, and jewellery.

Kuwait exports to a wide number of countries, the main ones being United Arab Emirates (1.3%), Saudi Arabia, China,  India and Iraq. Kuwait’s largest suppliers are China (18%), the UAE (11.9%), the United States (8%), and Japan with 5.8% (Trading Economics, 2023). Imports from other Gulf countries have increased since joining the GCC (Gulf Cooperation Council).

The county’s exports largely depend on its oil output and global oil prices. In 2021, export of goods increased from 40.11 billion USD in 2020 to 63.12 billion USD, while imports of goods increased from 27.73 billion USD in 2020 to 31.88 billion USD in 2021. This figure is low compared to 2013-14, when the country exported more than double this value. Kuwait has a structurally positive trade balance; however, the country is a net importer of services. In 2021, Kuwait's trade balance excluding services was USD 28.16 billion against USD 3.40 billion a year earlier. Kuwait has been recording trade surpluses since 1993 due to shipments of oil.

COVID-19 Country Response

Travel restrictions

Regularly updated travel information for all countries with regards to Covid-19 related entry regulations, flight bans, test and vaccines requirements is available on TravelDoc Infopage.
To find information about the current travel regulations, including health requirements, it is also advised to consult Travel Regulations Map provided and updated on a daily basis by IATA.

Import & export restrictions

A general overview of trade restrictions which were adopted by different countries during the COVID-19 pandemic is available on the International Trade Centre's COVID-19 Temporary Trade Measures webpage.

Economic recovery plan

For the general overview of the key economic policy responses to the COVID-19 pandemic (fiscal, monetary and macroeconomic) undertaken by the government of Koweit, please consult the country's dedicated section in the IMF’s Policy Tracker platform.

Support plan for businesses

For an evaluation of impact of the Covid pandemic on SMEs and an inventory of country responses to foster SME resilience, refer to the OECD's SME Covid-19 Policy Responses document.
You can also consult the World Bank's Map of SME-Support Measures in Response to COVID-19.