Kuwait: The dark horse among Gulf economies?

Posted on May 15, 2012


Kuwait city, the towers view from the gulf

Kuwait City. Will politics continue to derail the Gulf nation’s economic potential? (Photo courtesy Icarus Kuwait)

After a period of extended economic and political lethargy, Kuwait’s key macroeconomic indicators are looking increasingly positive. Most analysts have raised Kuwait’s GDP forecasts as the country pumps oil at full throttle, but the non-oil hydrocarbon economy is also expected to tick along nicely.

EFG Hermes expects 4% GDP growth this year on the back of a 25% jump in public sector wages, but still lower than 2011’s estimated 4.6%. Barclays Capital is predicting a 4.7% non-oil growth for the country, coupled with hydrocarbon revenue growth of 5.4%.

However, investments by the Kuwait government have fallen prey to political wrangling, and this has also had an effect on foreign investment flows. Ministry of finance data shows the country spent USD 39 billion in the first nine months of 2011 compared to the USD 70 billion earmarked in the budget.

Kuwait has seen four governments come and go in six years, but there is also a clear realization that the country needs to raise its game and speed up some of its key projects, especially in energy and infrastructure. Kuwaitis are hoping the parliament-government relationship lasts long enough this time around for Kuwait to make a robust recovery.

More intelligence on the Kuwaiti economy:

Posted in: Economy