Kuwait Economic Forecast

Kuwait Economic Outlook

November 3, 2020

Economic activity seemingly recovered slightly in Q3, after the drop in oil production and prices, coupled with lockdown measures, likely weighed heavily on GDP in Q2. Most lockdown restrictions were eased in the third quarter, while private sector credit growth was relatively healthy in July–August, which should have supported domestic demand. That said, EIA data showed oil production year-on-year declined at a significantly sharper pace in Q3 compared to Q2, while energy exports were likely downbeat due to still-subdued oil prices and global demand. Meanwhile, in politics, the government committed to implementing a 5% VAT starting in April next year as part of its efforts to reduce its reliance on oil—a key requirement for lawmakers to pass a new and much-needed debt law.

Kuwait Economic Growth

Next year, the economy is set to rebound due to stronger exports and recovering private consumption as the impact of the pandemic fades and foreign demand improves. That said, the introduction of a VAT will likely weigh on household spending somewhat, while uncertainty over the evolution of the pandemic, and global oil markets in turn, poses a risk to the outlook. FocusEconomics analysts forecast growth of 2.7% in 2021, which is unchanged from the previous month’s forecast. In 2022, our panel expects GDP growth of 3.6%.

Kuwait Economy Data

2015 2016 2017 2018 2019
Population (million)4.24.34.54.64.7
GDP per capita (USD)27,26125,30127,09930,67328,639
GDP (USD bn)114110121140135
Economic Growth (GDP, annual variation in %)0.62.9-4.71.20.4
Consumption (annual variation in %)1.51.03.05.7-  
Investment (annual variation in %)-  -  -  -  -  
Unemployment Rate2.22.21.82.12.2
Fiscal Balance (% of GDP)-13.4-13.9-8.9-3.0-  
Inflation Rate (CPI, annual variation in %)3.73.51.50.61.1
Policy Interest Rate (%)2.252.502.753.002.75
Exchange Rate (vs USD)0.300.310.300.300.30
Exchange Rate (vs USD, aop)0.300.300.300.300.30
Current Account (% of GDP)3.5-4.68.014.5-  
Current Account Balance (USD bn)4.0-5.19.620.3-  
Trade Balance (USD billion)27.819.525.740.8-  
Exports (USD billion)54.246.655.272.1-  
Imports (USD billion)26.427.029.531.3-  
Exports (annual variation in %)-48.7-14.118.530.7-  
Imports (annual variation in %)-3.12.39.16.0-  
International Reserves (USD)28.431.133.737.139.9
External Debt (% of GDP)35.738.545.6-  -  

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Kuwait Facts

Value Change Date
Exchange Rate0.30-0.05 %Dec 31

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