Kuwait’s economy is predominantly based on oil income, which accounted in 2019 for about 60% of GDP and 90% of government revenues. However, since mid-2014 oil prices have fallen steadily, which has put pressure on the fiscal base of the government, the largest driver of the economy.

These lower oil revenues put downward pressure on the trade surpluses. Due to this evolution Kuwait has faced a small budget deficit in the last years. As a result of the Corona crisis, this year’s budget deficit is even estimated at 20%.

Before Covid-19, government mainly played the first card. To stimulate economic growth, the government launches numerous (mega) projects that cover various sectors (oil, construction, tourism, residential construction, energy, ICT). In the Kuwait Development Plan 2015-2020 $155 billion is foreseen to modernize the country and diversify the economy away from oil. The New Kuwait Vision, the strategic framework for 2035, aims to put Kuwait back on the map as a regional hub for trade, financial services, investment, tourism and culture.

However, corruption and bureaucratic obstacles slowed down the roll-out of these projects. Moreover, there is also uncertainty about the succession of the ruling (sick) Emir, which creates a political vacuum in which major decisions are not taken and are delayed.