THE RISE IN OIL SUPPORTS KUWAIT TO ACHIEVE THE BEST ECONOMIC PERFORMANCE SINCE 2014

  • 19/08/2022

Kuwait City: The strong growth in oil and gas revenues in 2022 is a great relief to the Kuwaiti government, but the underlying problems remain, while high oil prices that escalated due to the conflict in Ukraine, as well as high demand in the recovery period after the virus. As a result of the Corona virus, Kuwait will achieve unexpected economic gains in 2022, like other major energy exporters.


For Kuwait, which remains particularly dependent on energy exports — the oil sector still accounts for about 40 percent of GDP, 70 percent of exports and 90 percent of government revenue — this effect is particularly exaggerated, the magazine added.

The latest forecasts for Kuwait's real GDP growth rate in 2022 have risen to 8.5%.

In general, the high oil price provides the best economic performance for Kuwait since 2014, when prices last stabilized above the $100 per barrel level, which reinforced expectations of an increase in Kuwait's primary financial balance for the current year, which is expected to record a surplus for the first time since 2014 - when Calculating the automatic transfer of 10% of oil revenues to the Future Generations Fund as net expenses.

From a more comprehensive viewpoint of the state’s financial file, and treating future generations fund transfers like any other accumulation of public reserves, Kuwait did not witness a deficit until 2020 and 2021.

At the same time, positive GDP and other financial indicators are only part of the economic picture of Kuwait, and presenting the story of the country’s economic growth through the lens of the period of high oil prices is misleading and does not indicate the whole truth. Only in 2020 was Kuwait one of the worst Countries are performing economically in the region, as the country's dependence on oil has hampered economic growth as much as it supports it today.

Kuwait's current problems are illustrated by the hostile relationship between the country's elected parliament and the appointed executive, which in the past few years has become stuck in a stalemate over spending, a dispute that focuses in part on accusations of mismanagement and corruption.

As the IMF noted at the conclusion of its Article IV mission to Kuwait for 2021, this ongoing political stalemate has impeded reforms and increased macroeconomic vulnerabilities.

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