Kuwait: 2023 Article IV Consultation-Press Release; and Staff Report

Author: International Monetary Fund. Middle East and Central Asia Dept.

Volume/Issue: Volume 2023 Issue 331

Publication date: September 2023

ISBN: 9798400254680

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Topics covered in this book

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Economics- Macroeconomics , Money and Monetary Policy , Public Finance , Business and Economics - Statistics , International - Economics , Industries - Energy , staff appraisal , higher-than-estimated capital expenditure , oil GDP growth , Fund standard , IMF staff calculation , Oil prices , Fiscal stance , Global

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Summary

The 2023 Article IV Consultation discusses that benefiting from high oil prices, Kuwait’s economic recovery continues, and inflation is contained. Non-oil gross domestic product (GDP) growth rose to an estimated 3.4 percent in 2021, benefiting from a recovery in domestic and external demand, and strengthened further to 4.0 percent in 2022. This, together with a pickup in oil production, resulted in a rebound in overall real GDP growth to 8.2 percent in 2022. While oil GDP growth is expected to decline in 2023 due to oil production cuts, non-oil GDP growth would stay robust, driven by domestic demand, and is foreseen to remain steady over the medium term. A structural reform package is needed to boost labor productivity and non-oil private sector-led growth. Strong non-oil private sector-led growth is needed to absorb new labor market entrants. This requires a comprehensive set of reforms that tackle deep-rooted structural challenges. In order to incentivize Kuwaitis to seek careers in the private sector, labor market reforms to promote a market aligned wage structure are needed.