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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 0.9% in 2021. It was expected to reach 4.3% in 2022 and 2.7% in 2023, subject to the post-pandemic global economic recovery (IMF, October 2021). 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 7.9% in 2021. It is expected to increase to 10.8% in 2022 and 21.6% in 2023. 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 16.3% of GDP in 2019 to 16.7% in 2020 and 15.5% in 2021. The current account balance is estimated to decrease to 13.3% in 2022 and 10.7% in 2023 (IMF, October 2021). Inflation ticked up to 1.1% in 2019 from 0.6% a year earlier, and then 2.1% in 2020 and 3.2% in 2021. It should stabilise at 3% in 2021 and 2022 (IMF, 2021). Kuwait's plans to introduce a new debt law continues to be delayed, with the Parliament expected to review the law proposal in 2022. 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 (estimated at US$690 billion) will continue to act as a fiscal backstop. 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).

 
Main Indicators 201920202021 (e)2022 (e)2023 (e)
GDP (billions USD) 136.19105.95e132.27138.78140.96
GDP (Constant Prices, Annual % Change) -0.6-8.90.94.32.7
GDP per Capita (USD) 28,513e22,684e27,92728,82228,795
General Government Gross Debt (in % of GDP) 11.611.7e7.910.821.6
Inflation Rate (%) 1.12.13.23.03.0
Unemployment Rate (% of the Labour Force) 1.2e1.3e0.00.00.0
Current Account (billions USD) 22.1417.71e20.5118.4115.04
Current Account (in % of GDP) 16.316.715.513.310.7

Source: IMF – World Economic Outlook Database , October 2021

Note: (e) Estimated Data

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 lack of water and fertile land. The agricultural sector is constituted mainly by fishing activities and contributed only 0.4% to the GDP, employing 2% of the workforce in 2021 (World Bank).

With 102 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 90% of government revenue.(OPEC, 2022). By 2030, Kuwait is planning to invest more than USD 87 billion in the oil sector, especially in creating new oil refineries. Overall, the industrial sector contributed more than half of GDP (45.4%) and employed 22% of the total workforce in 2021 (world Bank).

The services sector represented around 54.2% of the GDP and employed 76% of the active population in 2021 (world Bank). The most important sub-sectors are mostly real estate and financial services, which were recently recoverd from the global financial crisis.

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 1.8 22.1 76.1
Value Added (in % of GDP) 0.4 58.4 54.7
Value Added (Annual % Change) -2.7 -1.8 1.2

Source: World Bank - Latest available data.

 
Monetary Indicators 20162017201820192020
Kuwaiti Dinar (KWD) - Average Annual Exchange Rate For 1 USD 0.300.300.300.300.31

Source: World Bank - Latest available data.

 

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Foreign Trade

Kuwait is highly dependent on foreign trade, which represented 98.1% of the GDP in 2019, the latest World Bank data available. As the fifth largest OPEC oil producer, Kuwait's exports earnings mainly come from mineral fuels, oils and  distillation products (over 89% of total exports and accounting for almost 43% 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 2020 they were led by motor cars, radio-telephony transmission tools, electronics equipments, medicine and jewellery.

Kuwait exports to a wide number of countries, the main ones being Saudi Arabia (16% of all exports), China (14%), United Arab Emirates (13%), India (12%) and Iraq (9%). Kuwait’s largest suppliers are China (18%), the United States (8.6%), the UAE (8.3%) and Japan with 5.9% (Trading Economics, 2022). 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 2020, export of goods decreased from 64.4 billion USD in 2019 to 40.1 billion USD in 2020 while imports decreased from 33.5 billion USD in 2019 to 27.7 billion USD in 2020. 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 2019, Kuwait's trade balance excluding services was USD 35.3 billion against USD 45.7 billion a year earlier. Kuwait has been recording trade surpluses since 1993 due to shipments of oil. The country recorded a trade surplus of 2649.20 Million KWD (8.76 billion USD) in the second quarter of 2021 (Central Bank of Kuwait, 2022).

 
Foreign Trade Values 20162017201820192020
Imports of Goods (million USD) 31,45533,57335,86433,57427,738
Exports of Goods (million USD) 46,03255,01571,93864,48340,116
Imports of Services (million USD) 26,23927,18035,38828,65017,464
Exports of Services (million USD) 5,5274,7227,5617,4806,703

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

Foreign Trade Indicators 20152016201720182019
Foreign Trade (in % of GDP) 98.796.297.8103.198.2
Trade Balance (million USD) 27,99320,05425,64845,71135,361
Trade Balance (Including Service) (million USD) 10,252-7652,72716,99413,180
Imports of Goods and Services (Annual % Change) 6.84.29.2-0.9n/a
Exports of Goods and Services (Annual % Change) -0.92.5-4.8-4.8n/a
Imports of Goods and Services (in % of GDP) 44.948.546.645.644.9
Exports of Goods and Services (in % of GDP) 53.847.651.257.553.3

Source: World Bank ; Latest available data

Foreign Trade Forecasts 20212022 (e)2023 (e)2024 (e)2025 (e)
Volume of exports of goods and services (Annual % change) -1.06.83.43.23.1
Volume of imports of goods and services (Annual % change) 12.66.52.02.02.0

Source: IMF, World Economic Outlook ; Latest available data

Note: (e) Estimated 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)
2019
China 1.4%
India 1.2%
Saudi Arabia 1.0%
United Arab Emirates 0.9%
Qatar 0.6%
See More Countries 94.9%
Main Suppliers
(% of Imports)
2019
China 17.9%
United States 9.1%
United Arab Emirates 8.4%
Japan 6.3%
Saudi Arabia 6.2%
See More Countries 52.1%

Source: Comtrade, Latest Available Data

 

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Political Outline

Current Political Leaders
Emir: Nawaf Al-Ahmad Al-Jaber Al-Sabah (since 30 September 2020)
Prime Minister: Sabah Al-Khalid Al-Sabah (since 19 November 2019)
Next Election Dates
National Assembly: December 5, 2024.
Main Political Parties
Formation of political parties is not permitted, but political groupings, such as parliamentary blocs, have been allowed to emerge. These include religious and secular blocs, but most members of parliament are primarily concerned with the interests of their tribe.

Hadas, officially the Islamic Constitutional Movement, is a Kuwaiti Islamist political organization, offshoot of the Muslim Brotherhood.

The National Islamic Alliance is another (Shia) political party in Kuwait.

Executive Power
The chief of state is the Emir, a hereditary title. The Emir has absolute executive power including dissolving parliament, promulgating laws, referring bills back to the parliament for reconsideration, and appointing military officers. The Emir appoints the Prime Minister, who acts as the head of the government for an indefinite period of time. The Council of Ministers is appointed by the Prime Minister, after being approved by the Emir. The Emir has the power to dissolve parliament but must call anticipated elections within 60 days.
Legislative Power
The legislative power in Kuwait is unicameral. The parliament, called National Assembly, has 50 members which are elected by popular vote to serve four-year terms and 15 ex-officio members, who are government ministers appointed by the Emir . The parliament has the power to dismiss the Prime Minister or any other members of his cabinet by going through a series of constitutional procedures. The parliament can also override the Emir's veto by a two-third vote.
 

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COVID-19 Country Response

COVID-19 epidemic evolution
To find out about the latest status of the COVID19 pandemic evolution and the most up-to-date statistics on the COVID-19 disease in Kuwait, please visit the Kuwaiti government’s COVID-19 Updates webpage with the official data.

For the international outlook you can consult the latest situation reports published by the World Health Organisation as well as the global daily statistics on the coronavirus pandemic evolution including data on confirmed cases and deaths by country.
Sanitary measures

To find out about the latest public health situation in Kuwait and the current sanitary measures in vigour, please consult the the Kuwaiti government’s COVID-19 Updates page, the website of the U.S. embassy in Kuwait’s COVID-19 Information page and the Wikipedia 2020 Coronavirus Pandemic in Kuwait page.

Travel restrictions
The COVID-19 situation, including the spread of new variants, evolves rapidly and differs from country to country. All travelers need to pay close attention to the conditions at their destination before traveling. Regularly updated information for all countries with regards to Covid-19 related travel restrictions in place including entry regulations, flight bans, test requirements and quarantine is available on TravelDoc Infopage.
It is also highly recommended to consult COVID-19 Travel Regulations Map provided and updated on the daily basis by IATA.
The US government website of Centers of Disease Control and Prevention provides COVID-19 Travel Recommendations by Destination.

The UK Foreign travel advice also provides travelling abroad advice for all countries, including the latest information on coronavirus, safety and security, entry requirements and travel warnings.
Import & export restrictions
For information on all the measures applicable to movement of goods during the period of sanitary emergency due to the COVID-19 outbreak (including eventual restrictions on imports and exports, follow the section dedicated to Kuwait on the International Trade Centre's COVID-19 Temporary Trade Measures webpage. There are export prohibitions for all foodstuffs, medicines, medical supplies and equipment, unless authorized by Ministry of Trade and Industry.
Economic recovery plan
There are no specific plans for a Kuwaiti government economic recovery scheme to address the impact of the COVID19 pandemic on the Kuwaiti economy so far. For future possible up-to-date information please visit the website of the Kuwait Ministry of Finance (Arabic only).
Support plan for businesses
For information on the local business support scheme established by the Kuwaiti government to help small and medium-sized companies to deal with the economic impacts of the COVID19 epidemic on their activity, refer the Central Bank of Kuwait’s document Controls of Finance Extended to Individuals, Small & Medium-Sized Enterprises (SMEs) and the Economic Entities Negatively-Affected by COVID-19.


For a general overview of international SME support policy responses to the COVID-19 outbreak refer to the World Bank's Map of SME-Support Measures in Response to COVID-19.

Support plan for exporters
There are no specific support plans for exporters in Kuwait so far. For future possible up-to-date information please visit the website of the Kuwaiti Ministry of Commerce and Industry (Arabic only).
 

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