São Paulo – The economy of Kuwait is projected to contract by 1.4% in 2024 from 2023, when its gross domestic product is estimated to have fallen already. So said the International Monetary Fund (IMF) on Thursday (9) after a week-long mission, led by Francisco Parodi, that held discussions with authorities from the Gulf state in Kuwait City.
According to the end-of-mission statement issued by Parodi, the economic recovery from the pandemic has been disrupted, with the oil sector contracting by 4.3% in 2023 due to an OPEC+ production quota cut, and the non-oil sector expanding by only 0.8% In 2024 the oil production is expected to fall by another 4.3%. The non-oil sector is expected to expand by 2.0%
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“Elevated external risks surround the economic outlook. Volatility in oil prices and production arising from global factors poses two-sided risks to growth and inflation, as well as to the fiscal and external balances. While the conflicts in the Middle East and shipping disruptions in the Red Sea have had limited impacts on the economy so far, any major shock to the global oil market would have significant effects,” Parodi was quoted as saying in the IMF statement.
Global factors pose risks to Kuwait
Given prudent financial regulation and supervision by the Central Bank of Kuwait, inflation is projected to reach 3.2% in 2024, but the budgetary central government deficit is projected to widen further. Banks, however, have maintained strong capital and liquidity buffers, while their profitability has rebounded from pandemic lows. Progress with fiscal and structural reforms has been held back by political gridlock between the government and Parliament.
Translated by Guilherme Miranda
