Economical overview
Since the Second World War, Kuwait has
undergone dramatic development from poor desert land
with pearl fishing as the main source of income to one
of the world's richest countries. Today, the economy is
completely dominated by oil - it accounts for about 95
percent of export revenue and almost 90 percent of
Treasury revenue. At the same time, this poses problems:
there is a great need to reform and diversify the
government-dominated, bureaucratic and oil-centric
economy.
Almost all oil recovery is done by the state. Kuwait
Petroleum Corporation (KPC) is the world's twelfth
largest oil company with its own super tanker fleet,
refineries and thousands of Q8 gas stations in Europe
(in Sweden under the name OK-Q8). During the oil boom in
the 1970s, the country was able to make huge investments
abroad. Kuwait, among other things, bought into major
international oil companies.
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Countryaah.com:
Major imports by Kuwait, covering a full list of top products imported by the country and trade value for each product category.
The cost of the extensive and rapid reconstruction of
the country after the 1990-91 war (see Modern History)
more than halved Kuwait's foreign assets. Also, the Fund
for Future Generations, where money is set aside for the
welfare of future generations, had to be cut down and in
1992 Kuwait was forced for the first time in 30 years to
take out loans from foreign banks.
After that, the country recovered more than well. GDP
growth was just over 13 percent in 2003, compared with
0.7 percent in 2001. In 2005-2010, GDP grew by between
3.5 and 8.5 percent annually. In 2009, however, the
economy shrank as a result of the international
financial crisis. After a few good years, GDP growth
fell again in 2013 and then continued at a longer level
as a result of the decline in the world market price of
oil. The budget deficit that arose due to the price race
was offset by surpluses of around 30 percent that Kuwait
had for 15 years. Some of the surpluses have gone to the
Future Fund, whose value according to industry analysts
in 2017 amounted to almost US $ 600 billion.
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Abbreviationfinder.org: Check this abbreviation website to find three letter ISO codes for all countries in the world, including KWT which represents the country of Kuwait. Check findjobdescriptions to learn more about Kuwait.
At the beginning of 2018, Kuwait stated that the only
occasion when the Future Fund's resources were put into
operation was just after the Iraq invasion of 1990 and
the subsequent war, when major damage to infrastructure
was achieved. Among other things, a lot of oil sources
are set on fire. Provisions for the Future Fund, 10 per
cent of the income annually, have continued even when
the state calculated budget deficits and raised new
loans. At the same time, it has happened that the value
of the fund's assets has decreased, depending on how the
investments have developed. The fund is a major owner
in, among other things, German car manufacturers and the
French nuclear power industry.
In 2020, oil-producing countries, with concern, saw
two circumstances that drastically lowered oil prices.
The Corona pandemic, which disrupted industrial
production in China ("the world's workshop"), among
other things, reduced global demand for oil. At the same
time, the two major producers Saudi Arabia and Russia
launched a price war to cut market share. Prices fell to
levels not seen since the first years after the turn of
the millennium. The price war does not only threaten the
extraction of oil shale in the US and Canada, which
takes place at higher costs than the Saudi and Russian
ones. Most oil countries, when the price war broke out,
had built their state budgets on much higher oil prices
than those listed in 2020.
Despite mostly good economic development, Kuwait has
made it increasingly difficult to finance its oversized
public sector, which has expanded significantly since
the 1970s. Four out of five professional Kuwaiti people
are civil servants. Of these, only a small part is
expected to perform productive work; most of them
constitute a pure burden on the state budget, of which
about four-fifths are devoured by the salaries and
various subsidies of civil servants. In addition to
generous salaries, the government has guaranteed
citizens short working hours, free health care and free
education. In 2013, the government appointed a
commission with the task of reviewing the extensive
government subsidies; Already, it has been warned that
the sweet bread days, that is, the system that
guarantees the Kuwaiti generous state subsidies from the
cradle to the grave, cannot continue as hitherto.
However, cutting state aid has proved difficult. In
2016, the country's ruler disbanded the parliament
following an upset debate on reduced fuel subsidies.
Even before other measures, Oman has hesitated. Saudi
Arabia introduced VAT in 2018 when it was initiated in
the Gulf Cooperation Council (GCC), but both Kuwait and
Oman have stepped up to increase taxation.
Already in the mid-1990s, the first privatizations
were proposed, but reform work has been very slow.
Politicians do not want to make themselves unpopular by
introducing income tax and reducing the generous
subsidies. And the political opposition is afraid that
the ruling Sabah clan will become even richer through
privatizations.
The private sector is small and employs almost
exclusively foreign workers. In addition, the privately
owned companies have traditionally been largely owned by
a small number of influential Kuwaiti families. Through
increased privatization, advocates hope to create more
jobs. Since 1991, the government has had the goal that
every 10 jobs in the private sector should go to Kuwaiti
citizens.
Foreign companies can since 2001 establish themselves
in the country without Kuwaiti sponsor or partner. In
1999, the country's first tax-free zone was opened for
foreign companies (see Industry).
Despite strong opposition in Parliament, in 2010, a
privatization law was passed, which however excluded the
oil and gas, as well as the health and education
sectors. The year before, the government had also
presented a plan for economic development; this meant
that over $ 100 billion would be invested over a
five-year period in sectors other than oil and to
increase private investment. Mail and telecommunications
are among the areas affected by privatization plans - on
the other hand, not news distribution, which remains
under state control.
FACTS - FINANCE
GDP per person
US $ 34,244 (2018)
Total GDP
US $ 141,678 million (2018)
GDP growth
1.2 percent (2018)
Agriculture's share of GDP
0.5 percent (2018)
Manufacturing industry's share of GDP
7.9 percent (2018)
The service sector's share of GDP
59.2 percent (2017)
Inflation
1.5 percent (2019)
Government debt's share of GDP
14.7 percent (2018)
Currency
Kuwaiti dinar
Merchandise exports
US $ 77,080 million (2018)
Imports
US $ 31 370 million (2018)
Current account
US $ 24,049 million (2018)
Commodity trade's share of GDP
76 percent (2018)
Main export goods
crude oil and refined oil products, fertilizers
Largest trading partner
China, USA, Japan, United Arab Emirates, EU
2006
December
Minister resigns
Minister of Information Muhammad al-Sanusi resigns before the threat of being
questioned by Parliament that he would have restricted media freedom before the
June parliamentary elections.
July
New electoral law is adopted
The new parliament adopts a new electoral law that reduces the number of
constituencies from 25 to 5, giving voters the opportunity to choose up to four
candidates. The changes are considered to favor the opposition.
June
Reform friends are leading in parliamentary elections
Since the new emir dissolved Parliament in May, new elections are held.
Reform-friendly candidates who are in opposition to the government - both
liberals and Islamists - are increasing their majority in parliament from 29 to
33 of the 50 seats. The choice is the first with female participation: 28 of the
249 candidates are women, as well as 57 percent of eligible voters. However, no
woman enters Parliament. The new government is also dominated by the Sabah
family; Nasir continues as prime minister.
April
Women vote for the first time
For the first time, women are allowed to vote, in a local filling election.
February
New crown prince, new prime minister
Emir Sabah appoints his brother Nawaf al-Ahmad al-Jabir al-Sabah as crown
prince and his nephew Nasir al-Muhammad al-Sabah as prime minister.
January
New emir
The Emir of Jabir al-Ahmad al-Jabir al-Sabah dies after being ruler of the
country since 1977. He is succeeded by his cousin, Crown Prince Saad al-Abdullah
al-Salim al-Sabah, but he resigns after only nine days. New emir finally becomes
the then prime minister Sabah al-Ahmad al-Jabir al-Sabah.
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