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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 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).

 
Main Indicators 20222023 (E)2024 (E)2025 (E)2026 (E)
GDP (billions USD) 175.40159.69167.01172.13175.60
GDP (Constant Prices, Annual % Change) 8.9-0.63.64.12.4
GDP per Capita (USD) 36,09232,21533,03233,37733,382
General Government Gross Debt (in % of GDP) 3.13.43.15.89.4
Inflation Rate (%) n/a3.43.12.82.4
Unemployment Rate (% of the Labour Force) 2.22.22.22.22.2
Current Account (billions USD) 63.1748.4246.2442.9938.24
Current Account (in % of GDP) 36.030.327.725.021.8

Source: IMF – World Economic Outlook Database , October 2021

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 0.5% to the GDP, employing 2% of the workforce in 2022 (World Bank, 2023).

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 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. Overall, the industrial sector contributed more than half of GDP (45.4%) and employed 22% of the total workforce in 2022 (world Bank, 2023).

The services sector represented around 69.1% of the GDP and employed 76% of the active population in 2022 (world Bank, 2023). 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) 2.0 25.3 72.7
Value Added (in % of GDP) 0.5 45.4 69.1
Value Added (Annual % Change) -3.9 -12.2 -3.2

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 % 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.

 
Foreign Trade Values 20182019202020212022
Imports of Goods (million USD) 35,86433,57427,73831,88932,356
Exports of Goods (million USD) 71,93864,48340,11663,128101,270
Imports of Services (million USD) 36,83530,21819,17921,08827,545
Exports of Services (million USD) 8,1198,0367,1688,70610,609

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

Foreign Trade Indicators 20182019202020212022
Foreign Trade (in % of GDP) 103.198.2n/an/an/a
Trade Balance (million USD) 45,71135,36115,41240,55071,950
Trade Balance (Including Service) (million USD) 16,99413,1803,40128,16755,014
Imports of Goods and Services (Annual % Change) 1.5-10.4n/an/an/a
Exports of Goods and Services (Annual % Change) -0.4-10.1n/an/an/a
Imports of Goods and Services (in % of GDP) 45.644.9n/an/an/a
Exports of Goods and Services (in % of GDP) 57.553.3n/an/an/a

Source: World Bank ; Latest available data

Foreign Trade Forecasts 20232024 (e)2025 (e)2026 (e)2027 (e)
Volume of exports of goods and services (Annual % change) 0.00.00.00.00.0
Volume of imports of goods and services (Annual % change) 0.00.00.00.00.0

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)
2022
United Arab Emirates 1.0%
India 0.9%
Saudi Arabia 0.8%
China 0.5%
Pakistan 0.5%
See More Countries 96.3%
Main Suppliers
(% of Imports)
2022
China 18.8%
United Arab Emirates 11.9%
United States 8.6%
India 5.5%
Saudi Arabia 5.3%
See More Countries 50.0%

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
The Constitution of Kuwait supports the existence of political parties, although political parties in Kuwait have not been legalized since independence in 1961. Nonetheless, the constitution itself does not prohibit parties. In actual fact, 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.

The National Democratic Alliance (Centre right)

Kuwait Democratic Forum (Centre left)

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 16 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

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.

 

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