KUWAIT
- An Economic Profile ABEL CHRIS
CLABE · UNIBO
19TH MAY 2023
Kuwait is a geographically small, but wealthy nation, which boasts a relatively open economy with crude oil
reserves amounting to about 102 billion barrels – which is more than 6% of world reserves.
Petroleum and its associated industries accounts for over 50% of GDP, 90% of export revenues, and 90% of
government income. The Kuwaiti Dinar (KWD) is also the strongest currency in the world.
In 2015, for the first time in 15 years, the nation realized a budget deficit after decades of high oil prices; in 2016,
the deficit grew to 16.5% of GDP. This has been a constant in the country where expenditure has outpaced the
revenue of the government year after year. In 2017 the deficit was reduced to 7.2% of GDP, and the government
raised $8 billion by the issuing of international bonds.
Despite Kuwait’s dependence on oil, the government has saved itself against the impact of lower oil prices, by
saving annually at least 10% of government revenue in the ‘Fund for Future Generations’.
Kuwait has failed to diversify its economy or bolster the private sector, because of a poor business climate and
legislative-executive differences in governance.
The Kuwaiti Government has made little progress on its long-term economic development plan. While the
government planned to spend up to $104 billion over four years to diversify the economy, attract more
investment, and boost private sector participation in the economy, many of the projects did not materialize
because of an uncertain political situation or delays in awarding contracts.
To increase non-oil revenues, the Kuwaiti Government in August 2017 approved draft bills supporting a Gulf
Cooperation Council-wide value added tax scheduled to take effect in 2018.
© Moody Analytics
ECONOMIC SNAPSHOT
1
For the time period, Kuwait had a year on growth rate of
+2.43% in 2018, and -0.55% in 2019.
GDP COMPONENTS
The major share of which was from the Oil & Gas industry
followed by Community Services.
$160
$140
PBI : component composition breakdown for 2019
Value in billion USD
$120
$100
Net Exports
Expenditure
$80
Investment
$60
Consumption (C)
Investment (I)
Consumption
$40
Expenditure (G)
$20
$0
2017
2018
2019
Net Exports (NX)
41%
25%
25%
8%
Chris · CLABE
GDP OVER THE YEARS
GDP
200
174.07
180
Value in Billion USD
174.16
154.07
160
140
120
2
105.96
162.63
115.42
114.57
109.42
2015
2016
141.51
140.21
2018
2019
124.14
100
80
60
40
20
0
2009
2010
2011
2012
2013
2014
Years
2017
Over the last 10 years, Kuwait has seen fluctuations in the GDP which was at an all-time high of 174.16 billion USD in 2013 which declined to 140.21 billion
USD in 2019. The country saw positive GDP growth from 2009 to 2013 and from 2016 to 2018. Meanwhile the GDP showed a negative growth from 2013
to 2016 and from 2018 to 2019.
On analyzing the industries in detail, we see that the oil and gas industry contribute the highest to the economy of the state.
Therefore, fluctuations in global oil prices can have a significant impact on the country’s economy which can be see in the GDP values. But recent
economic reforms and diversification programs see an increasing contribution from other sectors of the economy while reducing dependency on oil and
gas sectors.
Chris · CLABE
INFLATION OVER THE YEARS
3
6.00%
Rate of Inflation
5.00%
4.60%
4.50%
4.80%
4.00%
3.30%
3.00%
2.70%
2.90%
3.30%
3.20%
2.20%
2.00%
1.10%
1.00%
0.50%
0.00%
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Years
Post the Recession of 2008, there has been moderate rates of inflation within the state of Kuwait.
Historically, the highest inflation rate in the country has been 13%, meanwhile the lowest rate has been -0.5%.
As we analyze for the period from 2009 to 2019, inflation reached the high of 4.8% in 2011 and a low of 0.5% in 2018. As the fluctuations have been
moderate, the impact of inflation has been negligible in the overall economy.
These rates have been usually been with the target range for inflation rates as per the monetary policy. This is of importance as Kuwait is an extremely
trade heavy nation with imports and exports being significant drivers of economic growth.
Recently, US Fed’s tightening monetary policies may have a positive impact on Kuwait as well since its currency is partially pegged to the dollar.
Chris · CLABE
CONSUMER PRICE INDEX OVER THE YEARS
CPI (2010 = 100)
Consumer Price Index (CPI)
140.0
120.0
100.0
4
95.7
100.0
2009
2010
104.8
108.3
111.2
114.4
118.1
2011
2012
2013
2014
2015
121.9
124.6
125.2
126.6
2016
2017
2018
2019
80.0
60.0
40.0
20.0
0.0
Years
The consumer price index has seen relative slower increases.
Food and beverages tend to be the highest drivers of the increase in the CPI as well as the highly volatile rental housing markets which are mainly
geared towards the expatriates in the state whose dwindling numbers have impacted the pricing index.
Though the recent consumer price surges in the post-pandemic economic landscape, the main expenditures to cushion the impact on consumer has
been to increase subsidies. As per the 2021-2022 Budget proposal, a KWD 3.9 billion subsidy has been allotted with more than 40% going towards
energy and oil subsidies followed by educational support at 20%, social welfare (16%) and housing support amounting to 8.8%
Chris · CLABE
POPULATION, SEX & LABOUR METRICS
Male
Female
Male
Female
Male
5
Female
Population
Labour Force
Unemployment
Kuwait has a population of 4.42
million in 2019
Kuwait has a labour force of
around 2.37 million in 2019
Kuwait has around 52,140
unemployed individuals.
Males amounted to 2.7 million
around 61%, while the female
population was around 1.7 million,
around 31%.
Around 25% of which are females
while the other 75% are male
The majority of which, around 59%
of them are women, the rest being
male
Chris · CLABE
UNEMPLOYMENT (2019)
Total Employed among the Labour force
amounting to 2.37 million in 2019
The Total Labour Force
amounts to 2.57 million which
is 58.2% of the population in
the State of Kuwait
57%
1.2%
41.8%
6
Total Unemployed in the country
around 52,140 unemployed or
2.2% of the available labour force
Persons Outside Labour Force
Averages around 41% of the
population
Chris · CLABE
Unemployment (% of total Labour Force)
UNEMPLOYMENT OVER THE YEARS
Unemployment
3.50%
2.90%
3.00%
2.60%
2.30%
2.50%
2.00%
7
1.60%
1.80%
2%
2.20%
2.20%
2.20%
2.20%
2.20%
2015
2016
2017
2018
2019
1.50%
1.00%
0.50%
0.00%
2009
2010
2011
2012
2013
2014
Unemployment rates in Kuwait has consistently been relatively low and the rate stable compared to the global averages and even regional average as
well. Across the years, the rate has fluctuated in single digit numbers. It reached a high of 3.70% in 2021 and a low of 0.50% in 1990.
The major issue in the labour market of Kuwait is the recent push by the government to invert the demographic scales as an enormous number of the
labour force are expatriates. This has led to a certain case of ‘Reverse Brain Drain’ as the lack of safety in employment has driven a great number of
foreign workers to relocate from the country.
This pattern of labour migration has led to many theorizing the economy of the country will be lacking in many specialized fields of the economy, as well
as education and unskilled job sectors.
Chris · CLABE
TRADE SUMMARY
$ 72.58 bn
EXPORTS in 2019
Exports (2018): $ 79.45 bn
Major Export Markets
Mineral Fuels
(89%)
Machinery (24%)
Aircraft (4.3%)
Transport (14%)
Chemicals (3.2%)
Base Metals (12%)
Other (3%)
Food (6%)
Upcoming Deposits
In 2021, among the nations of the world,
8
$ 61.14 bn
IMPORTS in 2019
Imports (2018): $ 62.04$186.54
bn
Major Import Markets
Kuwait is number 51st in total exports,
the 68th in total imports,
and the 48th most complex economy
according to
the Economic Complexity Index (ECI)
Chris · CLABE
100.0
71.3
80.0
60.0
40.0
20.0
0.0
33.6
0.0%
83.1
9
1000.0%
75.3
800.0%
59.9
40.8
31.1%
390.0%
67.0%
10.3
17.3%
-8.0%
-20.0
Rate
-21.5%
-82.2%
400.0%
200.0%
-0.8
2.7
-110.0%
600.0%
0.0%
-200.0%
PERCENTAGE CHANGE OF NX
NET EXPORTS VALUE IN BILLION
USD
TRADE OVER THE YEARS
Net Exports
In the table above, the trade economy of Kuwait has been presented by the value (in million KWD) and percentage change of Net Exports through the
years. Exports have had a positive reflection on the country’s GDP and output, oil & gas being its largest industry.
Kuwait has been a net exporter over the years except in 2016 where they had net imports to the tune of $800,000 KWD. Overall, the trade balance has
been positive showing a strong export market characterized by exports of Fuels, Chemicals and Plastics. Petroleum & petrochemicals are the major
export products.
In 2016, 2,509 products were exported to 142 countries. By stages of processing, Raw material exports have a product share of 67.01%. The major export
markets are India, China, & the GCC. Kuwait was the world's biggest exporter of sulfonated, nitrated and nitro sated hydrocarbons in 2019.
As Kuwait is only self sufficient in the steel industry, it has varying levels of imports of all other goods and services. The major share were Consumer
goods imports mainly, Automobiles and Jeweler. In 2016, 4,125 products were imported from 203 countries, the majority from China, the USA, the UAE
and Japan.
Chris · CLABE
REFERENCES
10
• Trading Economics (2022) - Trading Economics
•Zawya - Zawya Kuwait
• Economic Indicators – Moody Analytics - Moody
•Country Fact Sheet – World Bank – WBKWT
• Kuwait, Country Data Mapper – International
•ILOSTAT Explorer - International Labour Organization -
Monetary Fund (IMF) - IMF Kuwait
ILOSTAT.KWT
• World’s Top Exports – KWTWTEXP
•Kuwait Local – KWTLOC
• Observatory of Economic Complexity (OEC) - OEC
•Satista.com – StatKWTGDP
Kuwait Profile
•Economy of Kuwait – Wiki – WikiKWTEco
• CEIC DATA
•Trade Balance Kuwait – Macro Trends – MTKWT
• London School of Economics – LSE, LSE2
•World Integrated Trade Solution - WITS
Chris · CLABE
- SUBMITTED BY ABEL CHRIS
CLABE · UNIBO
- To Prof. Vincent
Donato
Professor of
Macroeconomics
19TH MAY 2023