Kuwait’s economy will also suffer in 2025 due to OPEC+ oil quotas

The International Monetary Fund (IMF) has predicted that Kuwait's economy will remain in recession due to OPEC+ oil production cuts.

“ The economy is projected to remain in recession in 2024, before recovering in the medium term ,” the IMF said a week after OPEC+ announced it would extend voluntary cuts by 2.2 million barrels a day until April 2025.

Kuwait's GDP contracted 3.6% last year, largely due to a 4.3% contraction in the oil sector due to production cuts. The economy contracted again by 1.5% year-on-year in the second quarter, after the oil sector contracted 6.8%. Here is the relevant graph

Earlier this year, a Reuters poll of economists predicted that Gulf Cooperation Council (GCC) economies will grow at a significantly slower pace this year due to ongoing oil production cuts. However, Kuwait is expected to fare the worst: according to the same survey, the country will have the highest inflation in the region and its economy will remain in recession.

This is a stark contrast from just two years ago, when high oil prices fueled an 85% growth in Kuwait's oil revenues, which translated into 8.5% GDP growth and a 70% reduction in the fiscal deficit – the first decline since Covid arrived. In the same year, NBK-Kuwait, the country's largest bank, saw its net profits increase 40.5% year-on-year to $1.7 billion.

Kuwait is a rich oil-based economy and the fifth richest country in the world by gross national income per capita. It is the 5th largest producer in OPEC and has 101 billion barrels of proven oil reserves, the 7th in the world. In fact, Kuwait's oil reserves are considerably larger than the United States' approximately 70 billion barrels.

Unfortunately, the country's economy is too dependent on oil . According to data from Kuwait's Ministry of Finance, oil accounts for 91% of exports and revenue, making the small Gulf nation extremely wealthy but also very vulnerable to oil price swings. Last year, however, Saudi Arabia's non-oil revenue reached 50% of GDP for the first time in history, thanks to the country's 2030 economic diversification plan.

The article Kuwait's economy will also suffer in 2025 due to OPEC+ oil quotas comes from Economic Scenarios .

This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/leconomia-del-kuwait-patira-anche-nel-2025-per-le-quote-petrolifere-opec/ on Tue, 10 Dec 2024 07:00:23 +0000.