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
  • Consultants submit bids for Saudi Arabia’s GCC rail link

    20 July 2026

     

    Consultants submitted proposals on 14 July for a contract to provide design consultancy services for the Saudi Arabian section of the GCC railway network, which is intended to link all six member states.

    Saudi Arabia Railways (SAR) issued the tender on 7 May, MEED previously reported.

    The tender covers the concept, preliminary and issued for construction design stages. SAR requires the selected consultant to review, update and complete the existing preliminary design.

    The consultants who submitted bids include: 

    • Atkins with Khatib & Alami
    • DeutscheBahn with ARX
    • Egis with Sener
    • Idom with Dal al-Handasah
    • Systra

    Saudi Arabia’s section of the railway will start at Al-Khafji in the Eastern Province, near the border with Kuwait, and end at Al-Batha, on Saudi Arabia’s border with the UAE. The route length in Saudi Arabia will be about 672 kilometres (km).

    The railway will interface with the Kuwait National Rail Road (KNRR) project on the Kuwaiti side. Last year, MEED exclusively reported that the KNRR design contract was awarded to Turkiye’s Proyapi Muhendislik ve Musavirlik Anonim Sirketi.

    The KNRR forms part of the wider GCC rail network. GCC railway projects have gained renewed momentum since the six member states signed the Al-Ula Declaration in January 2021.

    In October last year, Qatar’s cabinet approved a draft agreement paving the way for a railway link between Qatar and Saudi Arabia as part of the GCC railway network.

    GCC railway line

    Under the overall plan, the railway will run from Kuwait, pass through Dammam in Saudi Arabia, reach Bahrain via a planned causeway, and continue from Dammam to Qatar, the UAE and, ultimately, Muscat via Sohar in Oman. The railway is reported to span about 2,186km in total.

    The route length within each member state is as follows: 684km in the UAE, 672km in Saudi Arabia, 306km in Oman, 283km in Qatar, 145km in Kuwait and 36km in Bahrain.

    The railway is designed for passenger trains travelling at 220km/h and freight trains operating at 80-120km/h.

    With high levels of project activity, governments in spending mode and renewed cooperation under the Al-Ula Declaration, the latest efforts to restart the GCC railway project may make more progress than previous attempts. If completed, the railway could prove transformational for a region that is globally connected but still divided by national borders.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/17705320/main.gif
    Yasir Iqbal
  • Chinese firm wins Dubai drainage contract

    20 July 2026

    China State Construction Engineering Corporation (CSCEC) has announced it has won a contract to deliver a stormwater drainage pipeline package under Dubai Municipality’s Tasreef programme.

    The contract is for the TF-15-C2 stormwater drainage network project located along Umm Suqeim Road in the Al-Barsha and Al-Quoz areas of Dubai. 

    MEED exclusively revealed in May that the contractor had been selected for the engineering, procurement and construction (EPC) contract. The project is estimated to cost $162m.

    The scope of work includes the construction of about 20 kilometres of new stormwater pipelines, together with associated inspection and intake manholes. The project is located west of the Dubai Canal and will connect the Al-Quoz 3 and Al-Quoz 4 industrial areas with Al-Quoz 1.

    It is being delivered as part of Dubai’s Tasreef strategic plan, which supports the Dubai 2040 Urban Master Plan. Once completed, the new drainage infrastructure is expected to improve the emirate’s stormwater network, increase flood protection and enhance the resilience of Dubai’s infrastructure.

    In February, the municipality confirmed it had awarded contracts for five new projects under phase two of the programme to expand and strengthen Dubai’s stormwater drainage network.

    These include a separate contract awarded to CSCEC for the TF-11-C1 stormwater drainage project in the Dubailand area.

    Also in February, Dubai Municipality invited consultants to qualify for a contract to supervise construction on the TF-15-C2 stormwater drainage projects along with two other projects (TF-13-C1 and TF-16-C1) under the Tasreef programme.

    According to a source, a consultant has yet to be appointed.

    TF-16-C1 involves upgrading and rehabilitating the stormwater system east of the Dubai Canal, while TF-13-C1 involves building a water pipeline stormwater drainage system at Al-Marmoum, Al-Qudra and Al-Yalayis 2 & 3.

    Bids are currently under evaluation for the EPC contracts for both projects.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/17705058/main.jpg
    Mark Dowdall
  • Dubai receives eight bids for Hassyan SWRO pipeline contract

    20 July 2026

    Register for MEED’s 14-day trial access 

    Eight contractors have made offers for a contract to supply, install, test and commission glass-reinforced epoxy (GRE) water transmission pipelines and associated works for the Hassyan seawater reverse osmosis (SWRO) phase two network in Dubai.

    The contract relates to project one of the Hassyan pipeline network expansion being undertaken by state utility Dubai Electricity & Water Authority (Dewa).

    Local firm Binladin Contracting Group submitted the lowest offer of AED335.92m ($91.5m), according to results published by the utility.

    The other bids were:

    • Green Oasis General Contracting (UAE) – AED345.00m ($93.9m)
    • Al-Nasr Contracting (UAE) – AED391.54m ($106.6m)
    • Wade Adams Contracting (UAE) – AED393.80m ($107.2m)
    • RMB Contracting (UAE) – AED437.96m ($119.3m) 
    • Tristar Engineering & Construction (UAE) – AED441.55m ($120.2m)
    • Shapoorji Pallonji Mideast (UAE/India) – AED451.47m ($122.9m)
    • Gulf Petrochemical Services Trading (UAE) – AED495.20m ($134.8m)

    RMB also submitted a conditional discounted offer of AED427.02m ($116.3m). Three companies submitted regret notices, while one offer was rejected after no valid commercial offer was received. 

    In January, Dewa announced that construction of the 180-million-imperial-gallon-a-day phase one of the Hassyan SWRO independent water project was 90% complete.

    Dewa has two other contracts out for tender for GRE water transmission pipeline work related to the Hassyan SWRO phase two network.

    Project two was tendered on 22 January and has a bid submission deadline of 21 July. Project three was tendered on 26 January and has a bid submission deadline of 29 July.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/17704940/main.jpg
    Mark Dowdall
  • Abu Dhabi launches E20 highway expansion project

    20 July 2026

    Abu Dhabi’s Department of Municipalities and Transport (DMT) has announced the E20 highway expansion project.

    The scheme covers widening the main carriageway from three to five lanes, constructing more than 10 kilometres (km) of new ramps and loops, and building four bridges.

    Works also include 1.5km of internal roads and the addition of eight signalised junctions across Khalifa City and the Zayed International airport precinct.

    The project includes utility works, comprising 62km of stormwater drainage, 37km of irrigation networks and the installation of 485 streetlights.

    The E20 expansion is one of the major infrastructure schemes being overseen by DMT in Abu Dhabi.

    Separately, DMT is evaluating bids for a design-and-build contract to construct two bridges serving Hudayriyat Island in Abu Dhabi.

    The scope includes a two-lane bridge connecting 32nd Street to Shakhbout Bin Sultan Street, and a single-lane bridge on 8th Street. It also includes upgrades to signalised intersections.

    Shakhbout Bin Sultan Street is a two-way road with three lanes in each direction, providing access to and from Hudayriyat Island.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/17704696/main.jpg
    Yasir Iqbal
  • Firms given more time for Mid Island Parkway prequalifications

    20 July 2026

     

    Abu Dhabi’s Modon Infrastructure has extended the deadline to 31 July for firms to submit expressions of interest and prequalification statements for the next phase of Abu Dhabi’s Mid Island Parkway Project (MIPP), which will be developed as a public-private partnership (PPP).

    The previous deadline was 15 July. MEED understands the prequalification notice was issued in June, following Modon Infrastructure’s invitation in May for firms to register their interest.

    Modon Infrastructure will act as the lead developer and will hold a majority equity stake in the project company. It will award contracts for engineering, procurement and construction; operations and maintenance; and project advisory services.

    Phase two of the MIPP involves the construction of about 11 kilometres (km) of highways, comprising a mix of three-, four- and five-lane sections. The highways will connect the Um-Yifeenah, Al-Jubail, Al-Sammaliyyah and Sas Al-Nakhl islands to Khalifa City and the E10 road.

    The scope also includes the construction of three interchanges – E20, E10 and Dumbbell – on Al-Sammaliyyah Island.

    The project includes several major structures, including the E20 interchange, which will feature cast-in-place box-girder and void-slab bridges, and the E10 interchange, which will feature cast-in-place box-girder bridges. It also includes I-girder bridges between Raha Beach West and Sas Al-Nakhl Island, as well as a causeway at Sas Al-Nakhl Island.

    Further elements include a cast-in-place balanced cantilever bridge between Sas Al-Nakhl Island and Al-Sammaliyyah Island; a tunnel between Al-Sammaliyyah Island and Bilrimaid Island; and a cut-and-cover (open) tunnel on Bilrimaid Island. Another tunnel will connect Bilrimaid Island to Um-Yifeenah Island.

    Abu Dhabi awarded three packages for phase one of the MIPP in 2024. The contract for Package 1A was awarded to a joint venture of Turkish contractor Dogus Construction and UAE firm Gulf Contractors. Package 1B was awarded to a joint venture of Yas Projects (Alpha Dhabi Holding) and China Railway International Group. Beijing-headquartered China Harbour Engineering Company and the UAE’s Agility Engineering & Contracting Company won the contract for Package 1C.

    Phase one starts at the existing Saadiyat Interchange, connecting the E12 to the MIPP, and ends at the recently constructed Um-Yifeenah Highway.

    It comprises a dual main road with a total length of 8km, including four traffic lanes in each direction, two interchanges, a tunnel and associated infrastructure works.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/17704765/main.jpg
    Yasir Iqbal