meed-logo

line1 line2 line3
SIGN IN / REGISTER

Kuwait enjoys sustained non-oil growth

25 August 2023

This month’s special report on Kuwait also includes: 

> POLITICS: Stakeholders hope Kuwait can execute spending plans
> ENERGY: Kuwait’s $300bn energy target is a big test
> POWER & WATER: Warming erodes Kuwait’s power and water reserves
> BANKING: Kuwaiti banks enter bounce-back mode
> INTERVIEW: Kuwait’s Gulf Centre United sets course for expansion

 

After witnessing a substantial upswing in its economy in 2022, with real GDP growth surging to 8.2 per cent, according to the IMF, Kuwait’s growth has nominally slowed to 0.1 per cent in 2023. However, this plummet on paper is more a function of the country’s pullback in oil production than any dramatic swing in its economic fate.

Amid the surprise production cuts by the Opec+ producers in April 2023, Kuwait announced a cut of 128,000 barrels a day (b/d), equivalent to about 10 per cent of the group’s 1.15 million b/d in total cuts and around 5 per cent of Kuwait’s output. 

In May and June, Kuwait pumped 2.55 million b/d of crude oil, down from 2.65 million b/d in April. For 2024, the country’s quota is 2.676 million b/d.

This curbing of the country’s primary export has naturally had a significant impact on headline growth, but looking ahead to 2024, the growth rate is projected to recover to 2.7 per cent.

Non-oil sustenance

Behind the fluctuations in Kuwait’s headline real GDP growth due to oil production and prices, the country continues to enjoy strong domestic demand and robust non-oil growth, with 4 per cent non-oil GDP growth in 2022 and a projection of 3.8 per cent growth in 2023, according to the IMF.

The World Bank, meanwhile, expects Kuwait’s non-oil economy to grow by 4.4 per cent in 2023.

Kuwait’s fiscal surplus stood at an estimated 7 per cent of GDP in the 2022/23 fiscal year, although that surplus is expected to disappear in 2023/24 after the Kuwait government approved an expansionary budget with a spending allocation of KD26.3bn ($85.5bn) for the current fiscal period – more than 12 per cent larger than the KD23.5bn spending budget for 2022/23. 

If ultimately spent, the significantly higher allocated expenditure should further stimulate the non-oil economy.

The budget, approved on 2 August before the parliamentary summer recess, anticipates a fiscal deficit of KD6.8bn. This follows Kuwait achieving its first budget surplus in nine years in 2022/23. The current budget is based on an assumed average oil price of $70 a barrel, with an estimated government revenue of KD19.5bn, including KD17.2bn from oil revenue.

Kuwaiti business leaders are cautiously optimistic that this 2023 government could be the one to break the political gridlock

Oil price uncertainty

Looking ahead, oil price volatility remains the key threat to the oil-dependent Kuwaiti economy. Despite this, 2023/24 is conservatively budgeted in terms of its oil price assumptions, broadly aligning with the IMF assumptions for a $73.1 average in 2023, and $68.9 in 2024, and comparing with a July 2023 spot price around the $80-mark.

The hope will be that the price will remain at a higher mark and that the budgeted oil price turns out to be overly precautionary.

However, China’s economy showed signs of slipping again in July, with both imports and exports falling – a worrying sign for global trade and commodity prices. In mid-August, the International Energy Agency lowered its 2024 oil demand growth forecast to 1 million b/d in 2024, down 150,000 b/d from its prior forecast, pointing to a combination of high interest rates, tight credit, and sluggish manufacturing and trade.

The uncertainty of such scenarios should lend haste to the fiscal and structural reforms waiting in the wings. The hope is that Kuwait’s newly minted parliament and cabinet could mean that a resolution to the political gridlock is in sight, offering a path to the fiscal and structural reforms the country requires.

Kuwaiti business leaders are cautiously optimistic that this 2023 government could be the one to break the political gridlock between the government and parliament and reset the loop of successive resignations, reappointments and elections that have recently prevented any reform progress.

Reform requirements

Fiscal measures identified by the IMF as priorities include the need to rationalise Kuwait’s public sector wage bill and phase out energy subsidies, alongside introducing the long-delayed value-added tax and expanding the country’s corporate income tax base. 

Advocated structural reforms include labour market reforms, competition strengthening, and climate change adaptation and mitigation.

Enacting at least some of these reforms will be crucial to Kuwait’s fiscal and economic viability in the medium to long term, with each delay only making tackling items such as the public sector wage bill harder.

In the short term, Kuwait can, of course, keep pumping. In June, Kuwait Oil Company CEO Ahmed Jaber al-Aydan told the Kuwait Times that the country’s oil production capacity would reach 3 million b/d by 2025. He also said the oil company would spend KD13bn ($42.5bn) on oil projects over the next five years. 

The Kuwait government, meanwhile, announced in July that it planned to boost its crude oil production capacity to 3.15 million b/d within four years.

Yet at some point, Kuwait will still need to take a long, hard look at its future finances. All hopes are presently set on the 2023 government being the one to start moving in the right direction.

https://image.digitalinsightresearch.in/uploads/NewsArticle/11071825/main.gif
John Bambridge

Register for MEED's guest program now to access this article.

Click here to register
Exclusive from Meed
Related Articles
  • Chinese contractor wins Morocco solar plant deal

    10 August 2026

    China Harbour Engineering Company (CHEC), a subsidiary of China Communications Construction Company (CCCC), has won a contract to build a solar photovoltaic (PV) power plant in Fez in northern Morocco.

    Known as GreenPower Morocco 4 (GPM4), the project is being developed by Moroccan company GPM Holding through its utility-scale solar subsidiary GPM Parks.

    The project covers engineering design, equipment procurement and installation, construction of an operation and maintenance building, grid connection and commissioning. It also includes upgrades to the associated substation.

    According to CHEC, the completed plant will supply electricity to the local grid, although it did not disclose the project’s capacity or contract value. 

    The project is being developed under Law 13-09, which provides Morocco’s framework for private renewable energy generation.

    According to its website, GPM Holding is also developing another solar PV project called GreenPower Morocco 2 (GPM2). This follows the completion of its first solar project, the 34MW project (GPM1) commissioned in Tangier in 2024. 

    GPM1 was developed by Green Power Morocco, a special purpose vehicle owned by GPM Holding and UAE-based Amea Power. The $30m project covers 75 hectares and includes 91,000 PV panels. It is expected to generate about 66,149MWh a year.

    The project has a 25-year power purchase agreement in place with Amendis, a subsidiary of Veolia Morocco. PowerChina was the main engineering, procurement and construction (EPC) contractor.

    Chinese contractors have previously been involved in other projects in Morocco’s renewable energy sector.

    Shandong Electric Power Construction Company (Sepco 3), a subsidiary of PowerChina, was part of the EPC consortium for the 200MW Noor 2 concentrated solar plants and 150MW Noor 3 concentrated solar power projects at the Noor Ouarzazate complex.

    New contract awards have been limited in Morocco in 2026, although six solar PV plants are now in the execution stage under phases one and two of the 305MW Noor Atlas solar PV programme.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/18263680/main.jpg
    Mark Dowdall
  • Aramco puts out fire at Jizan refinery after Houthi strike

    10 August 2026

    Saudi Aramco said it had extinguished a fire that broke out at its Jizan refinery on Saudi Arabia’s Red Sea coast after the facility was hit in drone strikes by Yemen-based Houthi rebels on 9 August.

    The kingdom’s Ministry of Energy said the fire occurred at an Aramco refinery facility in Jizan and that emergency authorities had completed the necessary procedures to deal with the incident.

    The energy ministry did not say what started the fire, saying only that the incident caused no injuries.

    The Houthi rebels later claimed responsibility for the attack.

    The province of Jizan lies close to Saudi Arabia’s border with Yemen and has repeatedly been targeted by the Houthis in attacks on the kingdom’s energy infrastructure.

    The strike on the Jizan refinery was the second attack on the facility by the Houthis in as many weeks. Aramco shut the refinery on 27 July following a similar drone strike, which, according to media reports, damaged the integrated gasification combined-cycle unit and tank farm at the complex.

    On a call with investors to discuss Aramco’s second-quarter results, CEO Amin Nasser said recent attacks on the company’s facilities in the world’s top oil-exporting country had caused some disruption to production, but that he was confident operations could be restored quickly. He said the attacks had had no material operational or financial impact.

    Jizan refinery complex

    Saudi Aramco’s sprawling Jizan refinery complex entered operations in 2021.

    Aramco undertook the estimated $16bn-plus project in late 2010. The scheme consists of a refinery with an output capacity of 400,000 barrels a day (b/d), a major marine terminal and a 4GW combined-cycle power plant in Baish, in Saudi Arabia’s southwestern Jizan region.

    The Jizan refinery covers an area of 12 square kilometres. The complex processes Arabian Heavy and Arabian Medium crude grades to produce 80 million b/d of gasoline, 250 million b/d of diesel and more than 1 million tonnes a year of petrochemical products such as benzene and paraxylene.

    A multiple-pier marine terminal supports the supply of crude oil from oil fields located mainly in the kingdom’s Eastern Province to the refinery, as well as the export of surplus refined products to overseas markets. The terminal has been designed to accommodate very large crude carriers.

    A 4,000MW combined-cycle power plant uses approximately 90,000 b/d of vacuum residue from the refinery to generate electricity, hydrogen and water for the refinery, while conveying excess power to the national grid.

    The hydrocracker unit comprises two parallel trains with a combined capacity of 54,500 b/d. The diesel hydrotreater plant comprises two trains, each with a capacity of 87,500 b/d.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/18262347/main.jpg
    Indrajit Sen
  • Shamal picks Dutco for Dubai Zoo site homes

    10 August 2026

    Dubai-based Shamal Holding has awarded local contractor Dutco Construction the main construction works contract for a low-rise residential project on the site of the former Dubai Zoo in Jumeirah 1.

    The project will comprise 90 low-rise homes and is designed as a residential leasing community that will remain under Shamal’s ownership, with all homes offered for premium leasing.

    The development will retain mature trees from the former zoo and is planned around shared courtyards, landscaped open spaces and a central park. Residents will have access to a clubhouse, wellness area, children’s play area, family pool, lounge and gym.

    The architect is DXB Lab. The local H&H is the development manager for the project.

    Dutco has previously worked with Shamal on infrastructure elements of the Dubai Harbour and Dubai Harbour Marinas developments.

    Shamal’s wider real estate portfolio includes the Naia Island, Dubai Harbour and Nad Al-Sheba Gardens developments. The company also holds hospitality and leisure assets, including partnerships with Jumeirah, Hilton and Baccarat, and operates attractions such as Skydive Dubai and Deep Dive Dubai.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/18262386/main.png
    Colin Foreman
  • WEBINAR: Mena Oil & Gas Projects Market 2026-27

    10 August 2026

    Webinar: Mena Oil & Gas Projects Market 2026-27 
    Thursday 27 August 2026 | 11:00 AM GST  |  Register now

    Agenda:

    • Summary of the Mena oil, gas and petrochemicals projects market 
    • Overview of major megaprojects, including project programmes
    • Analysis of active contracts and spending to date
    • Review of top contracts by work already awarded
    • Long-term capital expenditure outlays and forecasts
    • Key contracts expected to be tendered and awarded over the next 18 months
    • Leading clients, contractors and market participants
    • Spending by segment: oil, gas and petrochemicals (upstream, downstream, onshore and offshore) 
    • Audience Q&A 

    Hosted by: Indrajit Sen, MEED’s oil & gas editor

    Click here to register

    https://image.digitalinsightresearch.in/uploads/NewsArticle/18260597/main.gif
    Indrajit Sen
  • Spanish firm renews Yanbu desalination O&M contract

    10 August 2026

    Spain’s Aqualia has announced it has renewed a contract to operate and maintain three floating desalination plants in Yanbu on Saudi Arabia’s Red Sea coast.

    The contract was awarded by the National Shipping Company of Saudi Arabia (Bahri) and will run until 14 September 2028, with an option to extend for a further two years.

    The three reverse osmosis (RO) plants are mounted on barges and have a combined production capacity of 150,000 cubic metres a day (cm/d). Each plant has a capacity of 50,000 cm/d.

    The three plants were originally deployed at Al-Shuqaiq and are designed to be relocated along Saudi Arabia’s coastline according to water demand. The barges are currently located at Yanbu.

    The $255m floating desalination project was commissioned for the Saudi Water Authority in 2022, with Bahri as the developer and UAE-based Metitio as the main contractor.

    Bahri is publicly listed on the Saudi Exchange but has significant government ownership, with the Public Investment Fund (PIF) holding 22.5% and Saudi Aramco Development Company owning 20% of the company.

    Aqualia is providing operation and maintenance services in Saudi Arabia through its joint venture Haji Abdullah Alireza Integrated Services Company (Haaisco), in which it holds a 51% stake.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/18259350/main.jpg
    Mark Dowdall