Kuwait benefits from oil price boom but long-term economic challenges loom
Key reforms and a lack of a diversified economy remain only two of Kuwait's major challenges.
Kuwait's Ministry of finance announced on Nov. 20 that it had narrowed its budget deficit for the 2021-2022 financial year more than it had initially forecasted, dropping 72.2% year-on-year to 2.99 billion dinars ($9.71 billion). The improvement comes on the back of elevated oil revenues.
Meanwhile, the newly elected parliament approved on Nov. 1 the country’s delayed budget for the fiscal year 2022-2023. The budget assumes an oil price of $80 per barrel and a break-even point of $80.4. It forecasts that revenues will be 23.4 billion dinars ($76 billion) with 91% deriving from oil. Expenditure is expected to be at 23.5 billion dinars ($76.3 billion), with around 75% of expenditure being directed toward public sector salaries and subsidies.
After a lackluster performance over the past few years due to the pandemic and depressed global oil prices, Kuwait’s economy is set to have a strong 2022 and 2023. Real GDP is expected to be 8.5% this year, the highest among all GCC countries, according to a recent World Bank forecast.
Kuwait is a major oil producer, holding around 7% of the world’s oil reserves. Oil accounts for around half of Kuwait’s GDP, as well as 95% of exports and approximately 90% of government export revenue.
