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Financial Outlook

The economy grew by just 0.8% in 2013, reflecting a slight reduction in oil production according to an IMF report published in December 2013. However, the organization added that high oil prices and increased production had enabled the government to continue to record high fiscal and external surpluses and build strong buffers. The IMF projected fiscal and external surpluses at 27% of GDP and 39% of GDP, respectively, in 2013, reflecting high oil prices. The IMF believes that the economic outlook will improve further in 2014 and over the medium term after that. In 2014, nonoil growth is expected to increase to 4.4% supported by public capital spending, driving average inflation to 3.5%. A constant level of oil production would keep total real GDP growth below 3%. Fiscal and current account surpluses are expected to remain large in 2014, according to the IMF. It warns that a sustained fall in oil prices presents the main risk to Kuwait. In its view the current accommodative monetary stance remains appropriate, and the exchange rate peg to a basket of currencies rather than the US dollar since June 2007 has provided a strong and credible monetary anchor.

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Further reading on Kuwait


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