Kuwait’s non-oil growth was boosted by strong government and consumer spending/Shutterstockby Kudakwashe Muzoriwa
The International Monetary Fund (IMF) said that Kuwait’s non-oil growth strengthened in 2019, but lower oil prices and output curbs are weighing on the oil sector, bringing the country’s overall growth to around 0.7 per cent in 2019 from 1.2 per cent in 2018.
The Washington-based fund stated that its projections are based on oil prices declining from $62 per barrel in 2019 to about $56 per barrel in 2023 and remaining broadly unchanged thereafter.
“The current conjuncture and the exhaustible nature of oil underscore the need to diversify the economy and ensure adequate savings for future generations,” the IMF said in a report.
Kuwait’s non-oil growth was boosted by strong government and consumer spending. Non-oil gross domestic product (GDP) is expected to expand three per cent and inflation could pick up to 1.8 per cent in 2020, supported by government spending, employment, and credit growth.
Kuwait’s consolidated balance after mandatory transfers to the Future Generations Fund (FGF) and excluding investment income amounted to a deficit of around eight per cent of GDP in 2018/19.
The IMF said that with the new debt law awaiting parliamentary approval, the government has been unable to issue debt since October 2017, instead, Kuwait has continued to rely on the General Reserves Fund for financing.
Furthermore, Kuwait’s financial assets continued to grow in 2019, but readily available buffers declined. The IMF estimated that the Kuwait Investment Authority’s assets surpassed 410 per cent of GDP by end of 2019, as the FGF continued to receive mandatory transfers from the government and generated strong returns on its assets.