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IMF says ending political impasse is key for Kuwait

25 August 2023

This month’s special report on Kuwait includes: 

> POLITICS: Stakeholders hope Kuwait can execute spending plans
> ECONOMY: Kuwait enjoys sustained non-oil growth
> 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

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The Washington-based IMF has said resolving political issues in Kuwait is critical for economic reforms in the country.

Political gridlock between the government and parliament could continue to delay economic reforms despite the country’s large fiscal and external buffers. The IMF also identified risks associated with volatility in oil prices and production arising from global factors.

Following its Article IV consultation with Kuwait, the IMF said in a statement: “Resolving the impasse is critical to accelerate reform momentum, and to thereby boost growth and diversify the economy.”

Despite the political deadlock, Kuwait’s economic recovery continues as non-oil growth remains robust in 2023, with declining headline inflation and a large current account surplus.

While oil production cuts are expected to result in a decline in GDP growth in 2023, non-oil GDP growth is forecast to stay robust, driven by domestic demand, and is anticipated to remain steady over the medium term. After peaking at 4.7 per cent in April 2022, inflation cooled to 3.7 per cent in May 2023.

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Colin Foreman

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