KUWAIT CITY, Dec 15: Al-Shall’s weekly report, referencing the International Monetary Fund’s (IMF) December analysis, described Kuwait’s economic performance as nearly entirely reliant on the oil market, reports Al-Seyassah daily. The IMF highlighted that Kuwait experienced 5.9 percent economic growth in 2022 due to the surge in oil prices driven by the Russia-Ukraine war.

However, this momentum faltered in 2023, with the economy contracting by -3.6 percent, the only Gulf Cooperation Council (GCC) country to record negative growth in 2023 (-3.6 percent) and 2024 (-2.8 percent). The report attributed the decline to the softening of oil prices and production levels, noting the failure of OPEC+ to restore lost production and the postponement of adjustments further exacerbated the situation. Consequently, the IMF downgraded its 2025 growth forecast for Kuwait from 3.3 percent to 2.6 percent.

Despite significant public spending and ongoing major projects, the economy has not diversified or generated sustainable citizen job opportunities. The report criticized the lack of reform, with 90 percent of the national budget dependent on oil revenues, underscoring the urgent need to restructure spending and develop alternative revenue streams. Notably, the non-oil sector showed modest progress, from -1 percent growth in 2023 to 2 percent in 2024, with a projected 2.1 percent in 2025. Core inflation rates are also expected to decline from 3 percent in 2024 to 2.4 percent in 2025. On a positive note, the report praised the professionalism of Kuwait’s Central Bank and highlighted the robust health of the local banking sector. However, it emphasized that Kuwait’s economic future remains precarious without substantial reforms.