Kuwait's Economy Projected to Contract by 3.3% in 2024 Due to Oil Sector Deterioration
Gotta Deal with the Oil Price Drop: Kuwait's economy might take a hit in 2024, with a projected decline in GDP by 3.3%, equivalent to KWD 1.663 billion, leaving the total at KWD 49.14 billion, down from KWD 50.8 billion in 2023. Here's a low-down on the economic landscape.
The blame game points to falling oil prices, which put a strain on the oil sector. Despite the non-oil sector's continued growth, it couldn't fully compensate for the oil industry's setbacks. This unwelcome situation is detailed in the reports by Al-Rai daily.
Non-Oil Sector's Upswing: A silver lining is visible in the non-oil sector's performance. Economic activity data at current prices reveals an impressive 3.56% rise for the non-oil GDP, equating to KWD 957.5 million, pushing it up to KWD 27.813 billion in 2024 compared to KWD 26.856 billion the previous year.
In stark contrast, the oil GDP saw a broad drop of 10.9%, amounting to KWD 2.62 billion, dropping the oil GDP to KWD 21.326 billion, falling from KWD 23.946 billion in 2023. Consequently, the non-oil sector's contribution to the GDP increased significantly from 52.86% to 56.6%, while the oil sector's share decreased from 47.1% to 43.4%.
Sector Breakdown at Current Prices: Below is the breakdown of various sectors' contribution to the GDP at current prices, with the oil and gas extraction and related services sector taking the largest share at 43.4%.
- Oil and gas extraction and related services: KWD 21.326 billion (43.4%)
- Public administration, defense, and social security: KWD 6.017 billion (12.24%)
- Financial intermediation and insurance: KWD 4.543 billion (9.24%)
- Manufacturing, real estate, and commercial projects: Each at KWD 3.93 billion (8%)
- Wholesale and retail trade: KWD 2.151 billion (4.37%)
- Health and social work: KWD 2.03 billion (4.13%)
- Communications: KWD 1.77 billion (3.6%)
- Hotels and restaurants: KWD 1.56 billion (3.17%)
- Electricity, gas, and water: KWD 1.168 billion (2.37%)
- Community and social services: KWD 1.02 billion (2.07%)
Source: Al-Rai daily [1]
While the economic landscape appears gloomy, it's crucial to remain optimistic and acknowledge the resilience shown by the non-oil sector. The government-led infrastructure projects, such as the Mubarak Al-Kabeer Port and Silk City, are expected to help diversify the economy and reduce oil dependency in the future [2].
As always, it's essential to stay aware of the trends and seek promising prospects to ride the economic wave more effectively.
[1] Al-Rai daily, various reports. [2] Kuwait Vision 2035.
- The oil sector contraction weakened Kuwait's economy, pushing it into recession in 2024, owing to lower oil prices and OPEC+ production cuts, leading to an increased fiscal deficit of 5.0%.
- Despite the currently grim situation, the non-oil sector has shown resilience, with a robust growth projection of around 2.8% annually, supported by government-led infrastructure projects and reforms aimed at economic diversification.
- Strategic infrastructure and Vision 2035 projects in energy, water, housing, and transportation are expected to drive faster execution and bolster non-oil sector growth, providing a buffer against oil sector volatility.
- In contrast to the projected 3.3% decline in Kuwait's GDP in 2024, the non-oil sector is expected to display resilience with a robust growth of approximately 2.8% annually.
- The oil sector's contraction in 2023, due to lower oil prices and OPEC+ production cuts, led to an increased fiscal deficit of 5.0%, pushing Kuwait's economy into recession in 2024.
- The government-led infrastructure projects, such as the Mubarak Al-Kabeer Port and Silk City, are anticipated to help diversify the economy and reduce oil dependency, with strategic initiatives in energy, water, housing, and transportation set to drive faster execution and bolster non-oil sector growth, providing a buffer against oil sector volatility.