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
  • Drilling resumes at Iraq’s Akkas field

    8 October 2026

     

    Drilling has resumed as part of the project to further develop Iraq’s Akkas gas field, according to industry sources.

    In March, MEED reported that development of the field had been disrupted by security issues related to the US and Israel’s war with Iran.

    Activity at the project site had been significantly reduced due to security concerns, which led to the evacuation of most non-Iraqi workers.

    Now, the project is progressing and drilling at the field is ongoing, sources said.

    One source said: “Many of the major issues that stopped drilling at the site have been dealt with in various ways, and the development of the field is proceeding.”

    Iraq held a ceremony in January to mark the start of drilling operations under the current phase of development. In July of the previous year, the Iraqi Oil Ministry announced a contract with US-based oilfield services provider SLB to develop the field. Under the agreement, SLB is drilling wells to raise initial output to 100 million cubic feet a day (cf/d), with a long-term production target of 400 million cf/d.

    The contract with SLB replaced a previous deal with Ukraine-based Ukrzemresurs, which has been terminated.

    It also covers the construction of surface infrastructure and pipelines to connect Akkas to central processing units.

    The gas produced at Akkas will fuel the Anbar combined-cycle power plant, which the Electricity Ministry is building.

    Akkas gas field development

    Located in western Anbar province, Akkas holds an estimated 5.6 trillion cubic feet of proven natural gas reserves. The field was discovered in 1992 and entered initial production in 1993, but efforts to develop it commercially have faced repeated delays.

    Development rights were originally awarded to a consortium of South Korea’s Kogas and Kazakhstan’s KazMunaiGas (KMG) during Iraq’s third licensing round in 2010. After KMG withdrew, Kogas took over as sole operator under revised contractual terms before work was subsequently halted.

    In April 2024, the Oil Ministry signed an agreement with Ukraine’s Ukrzemresurs targeting 100 million cf/d within two years and 400 million cf/d within four years. However, the deal faced strong domestic political resistance.

    Iraq’s parliamentary Oil and Gas Committee opposed the award, with committee member Ali Al-Mashkour telling Shafaq News Agency: “This contract involves a great waste of Iraq’s wealth, and there will be a waste of Iraq’s oil, and this confirms that Iraq is once again failing to choose reputable companies to work with in the most important economic field in the country.”

    He added: “We will work to uncover and expose the suspicions in this contract during the next stage, especially since this contract was made by some representatives for specific interests, which we will reveal soon with evidence.”

    The deal was subsequently terminated, paving the way for the current contract with SLB.

    The development of Akkas is central to Baghdad’s broader ambition to transition from a net gas importer into an exporter. Iraq remains heavily dependent on gas imports from Iran to meet domestic electricity demand. Both the US and Saudi Arabia have backed Iraq’s efforts to develop non-associated gas fields to reduce its economic and energy dependence on Tehran.

    READ THE OCTOBER 2026 MEED BUSINESS REVIEW – click here to view PDF

    Industry and logistics drive development at Neom; Saudi Arabia’s investment priorities realign amid conflict; MEED’s 2026 power developer ranking.

    Distributed to senior decision-makers in the region and around the world, the October 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/20366494/main5816.jpg
    Wil Crisp
  • Neom extends bid deadline for Oxagon wastewater plant

    8 October 2026

     

    Neom has extended the bid submission deadline for a contract to build a wastewater treatment plant for Oxagon, its industrial cluster.

    According to a source, the new deadline is 25 October. The original deadline was 2 October.

    Enowa, Neom’s energy and water utility, is tendering the contract.

    The industrial wastewater treatment package will have an initial capacity of 35,000 cubic metres a day (cm/d), supplied in modular trains of 5,000 cm/d each. A separate sanitary wastewater treatment package will have a capacity of 1,000 cm/d.

    The contract is structured as a design-build-operate project and covers the supply, installation and commissioning of industrial and sanitary wastewater treatment packages, as well as three years of operation and maintenance.

    According to sources, local contractor Alfanar, Beijing-based PowerChina and France-based Veolia are among the companies preparing bids.

    The project follows an earlier tender for the Oxagon Village Water Recycling Plant, which was cancelled despite contractors submitting bids in 2024.

    MEED reported at the time that PowerChina, Alfanar and Cairo-headquartered Orascom had submitted bids for that project.

    The earlier scheme included truck-receiving facilities, pretreatment, biological treatment using food chain reactor technology, tertiary treatment, sludge handling and recycled-water storage.

    The latest procurement appears to take a reworked approach to wastewater treatment at Oxagon Industrial Quarter. It replaces the previous engineering, procurement and construction scheme with an interim modular and demountable facility.

    The plant is designed to provide “interim wastewater treatment” capacity for Oxagon Industrial Quarter as industrial development progresses.

    As MEED understands, this includes treatment systems that can be installed and subsequently removed or relocated as requirements at Oxagon evolve. The plant can be expanded to a maximum capacity of 45,000 cm/d.

    The tender documents also state that Neom may consider export credit agency (ECA) financing for the project. The strength of bidders’ ECA financing proposals will form part of the commercial evaluation.

    READ THE OCTOBER 2026 MEED BUSINESS REVIEW – click here to view PDF

    Industry and logistics drive development at Neom; Saudi Arabia’s investment priorities realign amid conflict; MEED’s 2026 power developer ranking.

    Distributed to senior decision-makers in the region and around the world, the October 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/20347018/main.jpg
    Mark Dowdall
  • Syria seeks interest for $1.16bn Euphrates dam

    7 October 2026

    Register for MEED’s 14-day trial access 

    Syria’s Ministry of Energy has invited expressions of interest (EoIs) for the development of the Halabiyeh-Zalabiyeh dam project on the Euphrates River.

    The project has an indicative total cost of $1.16bn, according to the ministry’s EoI document. This includes $433.7m for the dam and hydropower plant and $729.6m for the pumped-storage power plant (PSP). 

    The scheme includes an 81MW hydroelectric power plant and a pumped-storage facility with a capacity of up to 1,200MW. The project will also include the construction of the dam and associated water-storage infrastructure. 

    The ministry seeks interest from qualified local and international companies, investors and other entities. Interested parties can participate in studies, design, financing, construction, and operation and maintenance of the project. 

    The ministry is considering several potential development structures, including build-own-operate-transfer, build-operate-transfer and public-private partnership models, as well as an engineering, procurement and construction (EPC) structure. It has said it is also open to proposals covering consultancy and financing services.

    The EoI covers several stages, including pre-feasibility and feasibility studies, financing and bankability studies, detailed and executive design, EPC execution, and operation and maintenance.

    The technical specifications envisage a 23-metre-high dam with a reservoir storage capacity of about 219 million cubic metres.

    The hydropower plant will have three generating units, while the 1,200MW PSP will have 3.5 hours of storage capacity and four reversible units.

    The deadline for submitting EoIs is 10 November, with enquiries accepted until 26 October.

    READ THE OCTOBER 2026 MEED BUSINESS REVIEW – click here to view PDF

    Industry and logistics drive development at Neom; Saudi Arabia’s investment priorities realign amid conflict; MEED’s 2026 power developer ranking.

    Distributed to senior decision-makers in the region and around the world, the October 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/20336025/main.jpg
    Mark Dowdall
  • Arada launches UAE construction arm with Roberts

    7 October 2026

    Register for MEED’s 14-day trial access 

    UAE developer Arada has integrated Australian contractor Roberts into the UAE market as part of its wider business strategy.

    Arada acquired Roberts in 2025 after entering the Australian market. The tier-one contractor delivers projects in the healthcare, education, commercial, residential, hospitality, industrial, life sciences and defence sectors.

    At the time of the acquisition, Arada said it planned to invest about $20m in Roberts. The investment is intended to give the developer greater control over the delivery of its Australian projects and support Roberts’ expansion into markets including the UAE.

    Arada has said it could invest up to $100m in Roberts’ expansion into new sectors and markets. The company is targeting $1bn in annual revenue from Roberts by 2028.

    Roberts has established a UAE office, with a head office team already in place. Arada said the contractor’s capabilities will support the delivery of its high-rise residential and social infrastructure projects.

    The contractor’s first UAE project will be phase two of Arada Central Business District, a commercial development within Aljada in Sharjah. Arada is developing the AED35bn ($9.5bn) mixed-use project.

    Roberts is also providing preconstruction services for several Arada projects in Dubai and Sharjah, ahead of starting site work.

    READ THE OCTOBER 2026 MEED BUSINESS REVIEW – click here to view PDF

    Industry and logistics drive development at Neom; Saudi Arabia’s investment priorities realign amid conflict; MEED’s 2026 power developer ranking.

    Distributed to senior decision-makers in the region and around the world, the October 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/20334926/main.jpg
    Yasir Iqbal
  • Expo Riyadh sets October deadline for Saudi Arabia pavilion

    7 October 2026

     

    Expo 2030 Riyadh Company (ERC), tasked with delivering the Expo 2030 Riyadh venue, has set a deadline of 25 October for bids for a contract to build the Saudi Arabia pavilion.

    The tender was issued on 19 May, with an initial bid submission deadline of 26 August.

    The pavilion is a major asset located within the KSA District on the eastern side of the Expo 2030 Riyadh masterplan, in the Loop of Nations district.

    Construction activity at the Expo site is accelerating, with Riyadh moving to award its first major vertical contracts and advancing infrastructure works across the programme.

    Last month, MEED reported that ERC had received contractor interest on 14 September for a contract to design and build a convention centre in the site’s Collaboration District.

    ERC also tendered a contract to deliver the Souq areas within the Expo site, as MEED exclusively reported on 8 September.

    These areas are divided into five precincts, with a total development area of about 300,000 square metres.

    Also in September, Saudi Arabia’s Royal Commission for Riyadh City awarded a design-and-build contract to construct a new metro station serving the Expo 2030 site.

    In April, ERC awarded two contracts for the next phase of infrastructure works at the site to local firm Al-Yamama Company.

    The scope covered the construction of road networks and infrastructure for water, sewage, electricity, telecommunications and electric vehicle (EV) charging.

    These awards followed ERC’s January award of an estimated SR1bn ($267m) contract for initial infrastructure works at the site to local firm Nesma & Partners.

    That scope covered about 50 kilometres of integrated infrastructure networks, including internal roads and essential utilities such as water, sewage, electrical and communications systems, as well as EV charging stations.

    The masterplan covers 6 square kilometres, making it one of the largest sites ever designated for a World Expo event. Situated north of the Saudi capital, the site will be near the future King Salman International airport and will provide direct access to Riyadh landmarks.

    The Public Investment Fund, Saudi Arabia’s sovereign wealth vehicle, launched ERC – a wholly owned subsidiary – in June 2025 to build and operate facilities for Expo 2030.

    READ THE OCTOBER 2026 MEED BUSINESS REVIEW – click here to view PDF

    Industry and logistics drive development at Neom; Saudi Arabia’s investment priorities realign amid conflict; MEED’s 2026 power developer ranking.

    Distributed to senior decision-makers in the region and around the world, the October 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/20334856/main.jpg
    Yasir Iqbal