Economy of Kuwait

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Economy of Kuwait
All major buildings in kuwait in one shot by irvin calicut.jpg
CurrencyKuwaiti dinar (KD)
1 April – 31 March
Trade organisations
WTO and OPEC
Statistics
GDP$120 billion (2017 est.)[1]
GDP growth
1.6% (2015), 3.5% (2016),
-2.9% (2017e), 1.9% (2018f) [2]
GDP per capita
$29,040 (2017 est.)[1]
GDP by sector
agriculture (0.4%), industry (58.7%), services (40.9%) (2017 est.)[1]
2.5% (2017 est.)[1]
Unemployment2.1% (2017 est.)[1]
Main industries
petroleum, petrochemicals, cement, shipbuilding and repair, desalination, food processing, construction materials
96th (2018)[3]
External
Exports$54.09 billion (2017 est.)
Export goods
oil and refined products, fertilizers
Main export partners
 South Korea 16.8%
 China 14.4%
 Japan 9.6%
 India 9.2%
 United States 7.5%
 Singapore 5.6% (2016)[1]
Imports$29.36 billion (2017 est.)[1]
Import goods
food, construction materials, vehicles and parts, clothing
Main import partners
 China 13%
 United States 9.5%
 Saudi Arabia 7.6%
 Japan 6.4%
 Germany 5%
 France 4.3%
 India 4.2% (2015)[4]
Negative increase$48.91 billion (31 December 2017 est.)[1]
Public finances
Negative increase$15.9 billion (Jan. 2018)[5]
Revenues$52.87 billion (2017 est.)[1]
Expenses$61.39 billion (2017 est.)[1]
Economic aidN/A
Standard & Poor's:[6]
AA- (Domestic)
AA- (Foreign)
AA+ (T&C Assessment)
Outlook: Stable[7]
Moody's:[7]
Aa2
Outlook: Stable
Fitch:[7]
AA
Outlook: Stable
Main data source: CIA World Fact Book
All values, unless otherwise stated, are in US dollars.

Kuwait is a small,[8] petroleum-based economy; the Kuwaiti dinar is the highest-valued unit of currency in the world.[9] Non-petroleum industries include financial services.[8] According to the World Bank, Kuwait is the fourth richest country in the world per capita.[10] Kuwait is the second richest GCC country per capita (after Qatar).[10][11][12]

Finance[edit]

Kuwait has a leading position in the financial industry in the GCC; the abyss that separates Kuwait from its Gulf neighbors in terms of tourism, transport, and other measures of diversification is absent in the financial sector;[13] the Emir has promoted the idea that Kuwait should focus its energies, in terms of economic development, on the financial industry.[13]

The historical preeminence of Kuwait (among the Gulf monarchies) in finance dates back to the founding of the National Bank of Kuwait in 1952;[13] the bank was the first local publicly traded corporation in the Gulf.[13] In the late 1970s and early 1980s, an alternative stock market, trading in shares of Gulf companies, emerged in Kuwait, the Souk Al-Manakh.[13] At its peak, its market capitalization was the third highest in the world, behind only the U.S. and Japan, and ahead of the UK and France.[13]

Kuwait has a large wealth-management industry that stands out in the region.[13] Kuwaiti investment companies administer more assets than those of any other GCC country, save the much larger Saudi Arabia;[13] the Kuwait Financial Centre, in a rough calculation, estimated that Kuwaiti firms accounted for over one-third of the total assets under management in the GCC.[13] The relative strength of Kuwait in the financial industry extends to its stock market.[13] For many years, the total valuation of all companies listed on the Kuwaiti exchange far exceeded the value of those on any other GCC bourse, except Saudi Arabia.[13] In 2011, financial and banking companies made up more than half of the market capitalization of the Kuwaiti bourse; among all the Gulf states, the market capitalization of Kuwaiti financial-sector firms was, in total, behind only that of Saudi Arabia.[13]

In recent years, Kuwaiti investment companies have invested large percentages of their assets abroad, and their foreign assets have become substantially larger than their domestic assets.[13]

Kuwait is a major source of foreign economic assistance to other states through the Kuwait Fund for Arab Economic Development, an autonomous state institution created in 1961 on the pattern of Western and international development agencies. Over the years aid was annually provided to Egypt, Syria, and Jordan, as well as the Palestine Liberation Organization. In 1974, the fund's lending mandate was expanded to include all developing countries in the world.

Oil[edit]

Main article: Oil industry of Kuwait
See also: Oil reserves in Kuwait and Petroleum industry in Kuwait

In 1934, the Emir of Kuwait granted an oil concession to the Kuwait Oil Co. (KOC), jointly owned by the Anglo-Persian Oil Company (later British Petroleum Company) and Gulf Oil Corporation In 1976, the Kuwaiti Government nationalized KOC. The following year, Kuwait took over onshore production in the Divided Zone between Kuwait and Saudi Arabia. KOC produces jointly there with Texaco, Inc., which, by its 1984 purchase of Getty Oil Co., acquired the Saudi Arabian onshore concession in the Divided Zone.

In the Offshore Divided Zone, the Arabian Oil Co. – 80% owned by Japanese interests and 10% each by the Kuwaiti and Saudi Governments – has produced on behalf of both countries since 1961. The original concession agreements have expired on January 2003; negotiations to replace the concession with a technical service agreement were completed in 2002.

The Kuwait Petroleum Corporation (KPC), an integrated international oil company, is the parent company of the government's operations in the petroleum sector, and includes Kuwait Oil Company, which produced oil and gas; Kuwait National Petroleum Co., refining and domestic sales; Petrochemical Industries Co., producing ammonia and urea; Kuwait Foreign Petroleum Exploration Co., with several concessions in developing countries; Kuwait Oil Tanker Co.; and Santa Fe International Corp. The latter, purchased outright in 1982, gives KPC a worldwide presence in the petroleum industry.

KPC also has purchased from Gulf Oil Co. refineries and associated service stations in the Benelux nations and Scandinavia, as well as storage facilities and a network of service stations in Italy. In 1987, KPC bought a 19% share in British Petroleum, which was later reduced to 10%. KPC markets its products in Europe under the brand Q8 and is interested in the markets of the United States and Japan.

Kuwait has about 94 billion barrels (14.9 km3) of recoverable oil reserves. Estimated capacity, before the war, was about 2.4 million barrels per day (380×10^3 m3/d). During the Iraqi occupation, Kuwait's oil-producing capacity was reduced to practically nothing. However, tremendous recovery and improvements have been made since. Oil production was 1.5 million barrels per day (240×10^3 m3/d) by the end of 1992, and pre-war capacity was restored in 1993. Kuwait's production capacity is estimated to be 2.5 million barrels per day (400×10^3 m3/d). Kuwait plans to increase its capacity to 3.5 million barrels per day (560×10^3 m3/d) by 2005.

Reserve funds[edit]

Main article: Kuwait Investment Authority
A proportional representation of Kuwait's exports.

The Kuwait Investment Authority (KIA) is Kuwait's sovereign wealth fund specializing in foreign investment; the KIA is the world's oldest sovereign wealth fund. Since 1953, the Kuwaiti government has directed investments into Europe, United States and Asia Pacific; as of 2015, the holdings were valued at $592 billion in assets.[14] It is the 5th largest sovereign wealth fund in the world.

The KIA manages two funds: the General Reserve Fund (GRF) and Future Generations Fund (FGF);[15] the GRF is the main treasurer for the government.[15] It receives all state revenues and all national expenditures are paid out of this fund;[15] the KIA does not disclose its financial assets in public, but it is estimated that the KIA has $410 billion in assets as of February 2014.

The KIA was the main source of capital for the Kuwaiti government during the Gulf War; the Kuwaiti government relied on the KIA to pay for coalition expenses and postwar reconstruction.[16] The KIA was worth $100 billion prior to 1990, KIA funds were depleted to $40–$50 billion after the Gulf War.

Future Generations Fund[edit]

The Future Generations Fund (FGF) was created in 1976 by transferring 50% from the general reserve fund at that time; the FGF is a saving funds for future generations. 25% of all state revenues are annually transferred to the fund.[17]

All of the FGF is invested abroad, with an estimated 75% invested in the US and Europe and the rest in emerging markets, mainly China and India.

Science and technology[edit]

To date, Kuwait has registered 384 patents, the second highest figure in the Arab world.[18][19][20][21] Kuwait produces the largest number of patents per capita in the Arab world and OIC;[22][23][24][25] the government has implemented various programs to foster innovation resulting in patent rights.[22][26] Between 2010 and 2016, Kuwait registered the highest growth in patents in the Arab world.[26][22][20]

Entrepreneurship[edit]

In the past five years, there has been a significant rise in entrepreneurship and small business start-ups in Kuwait;[27][28] the informal sector is also on the rise,[29] mainly due to the popularity of Instagram businesses.[30][31][32] Many Kuwaiti entrepreneurs use the Instagram-based business model.[33]

Tourism[edit]

Main article: Tourism in Kuwait

Tourism accounts for 1.5 percent of the GDP.[34][35] In 2016, the tourism industry generated nearly $500 million in revenue;[36] the annual "Hala Febrayer" festival attracts many tourists from neighboring GCC countries,[37] and includes a variety of events including music concerts, parades, and carnivals.[37][38][39] The festival is a month-long commemoration of the liberation of Kuwait, and runs from February 1 to February 28. Liberation Day itself is celebrated on February 26.[40]

Agriculture[edit]

In 2017, agriculture (including fisheries) accounts for almost 0.4 percent of the gross domestic product and does not offer an important source of employment.[1] Around 4 percent of the economically active population works in agriculture, almost all foreigners;[41] the majority of farm owners are investors.[42] The agricultural sector provides fruit and vegetables for sale in the country's supermarkets; the total agricultural land covered 1 521 sq km in 2014.[42] Agriculture is limited by the lack of water and arable land; the government has experimented in growing food through hydroponics and carefully managed farms. However, most of the soil which was suitable for farming in south central Kuwait was destroyed when Iraqi troops set fire to oil wells in the area and created vast "oil lakes". Fish and shrimp are plentiful in territorial waters, and largescale commercial fishing has been undertaken locally and in the Indian Ocean.

Transport[edit]

Main article: Transport in Kuwait
A highway in Kuwait City

Kuwait has an extensive and modern network of highways. Roadways extended 5,749 km (3,572 mi), of which 4,887 km (3,037 mi) is paved. There are more than 2 million passenger cars, and 500,000 commercial taxis, buses, and trucks in use. On major highways the maximum speed is 120 km/h (75 mph). Since there is no railway system in the country, most people travel by automobiles.

The country's public transportation network consists almost entirely of bus routes; the state owned Kuwait Public Transportation Company was established in 1962. It runs local bus routes across Kuwait as well as longer distance services to other Gulf states;[43] the main private bus company is CityBus, which operates about 20 routes across the country. Another private bus company, Kuwait Gulf Link Public Transport Services, was started in 2006, it runs local bus routes across Kuwait and longer distance services to neighbouring Arab countries.[44]

There are two airports in Kuwait. Kuwait International Airport serves as the principal hub for international air travel. State-owned Kuwait Airways is the largest airline in the country. A portion of the airport complex is designated as Al Mubarak Air Base, which contains the headquarters of the Kuwait Air Force, as well as the Kuwait Air Force Museum. In 2004, the first private airline of Kuwait, Jazeera Airways, was launched.[45] In 2005, the second private airline, Wataniya Airways was founded.

Kuwait has one of the largest shipping industries in the region; the Kuwait Ports Public Authority manages and operates ports across Kuwait. The country’s principal commercial seaports are Shuwaikh and Shuaiba which handled combined cargo of 753,334 TEU in 2006.[46] Mina Al-Ahmadi, the largest port in the country, handles most of Kuwait's oil exports.[47] Construction of another major port located in Bubiyan island started in 2007; the port is expected to handle 1.3 million TEU when operations start.

Macro-Economic[edit]

The following table shows the main economic indicators in 1980–2017.[48]

Year 1980 1985 1990 1995 2000 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
GDP in $
(PPP) 		45.32 Bln. 45.49 Bln. 52.04 Bln. 94.48 Bln.. 112.87 Bln. 187.25 Bln. 207.52 Bln. 225.81 Bln. 235.95 Bln. 220.92 Bln. 218.31 Bln. 247.18 Bln. 271.51 Bln. 276.91 Bln. 283.63 Bln. 283.83 Bln. 293.76 Bln. 291.48 Bln.
GDP per capita in $
(PPP) 		33,082 26,759 24,435 48,207 50,908 62,601 65,197 66,422 68,553 63,392 60,947 66,853 71,326 71,150 70,217 66,956 68,540 66,163
GDP growth
(real) 		−20.4 % −4.3 % −26.6 % 1.7 % 4.7 % 10.1 % 7.5 % 6.0 % 2.5 % −7.1 % −2.4 % 10.9 % 7.9 % 0.4 % 0.6 % −1.0 % 2.2 % −2.5 %
Inflation
(in Percent) 		6.9 % 1.5 % 15.8 % 2.5 % 1.6 % 4.1 % 3.1 % 5.5 % 6.3 % 4.6 % 4.5 % 4.9 % 3.2 % 2.7 % 3.2 % 3.7 % 3.5 % 1.5 %
Government debt
(Percentage of GDP) 		... ... ... 78 % 35 % 12 % 8 % 7 % 5 % 7 % 6 % 5 % 4 % 3 % 3 % 5 % 10 % 21 %

See also[edit]

References[edit]

  1. ^ a b c d e f g h i j k "Kuwait". The World Factbook. Central Intelligence Agency (CIA). 2018. Retrieved 21 April 2018.
  2. ^ "World Bank forecast for Kuwait, June 2018 (p. 152)" (PDF). World Bank. Retrieved 11 September 2018.
  3. ^ "Ease of Doing Business in Kuwait". Doingbusiness.org. Retrieved 24 November 2017.
  4. ^ "Import Partners of Kuwait". CIA World Factbook. 2015. Retrieved 8 August 2016.
  5. ^ "Import Partners of Kuwait". CEIC Data. 2018. Retrieved 21 April 2018.
  6. ^ "Sovereigns rating list". Standard & Poor's. Retrieved 26 May 2011.
  7. ^ a b c Rogers, Simon; Sedghi, Ami (15 April 2011). "How Fitch, Moody's and S&P rate each country's credit rating". The Guardian. Retrieved 31 May 2011.
  8. ^ a b "Kuwait". The World Factbook. Central Intelligence Agency. 10 April 2015.
  9. ^ "10 Most Valuable Currencies in the World". Silicon India. 21 March 2012.
  10. ^ a b "GDP per capita, PPP (current international $)", World Development Indicators database, World Bank. Database updated on 14 April 2015.
  11. ^ GDP – per capita (PPP), The World Factbook, Central Intelligence Agency.
  12. ^ Economic Outlook Database, October 2015, International Monetary Fund. Database updated on 6 October 2015.
  13. ^ a b c d e f g h i j k l m "The Wages of Oil: Parliaments and Economic Development in Kuwait and the UAE". Michael Herb.
  14. ^ "Kuwait Investment Authority Profile Page". Sovereign Wealth Fund Institute. Retrieved 12 March 2016.
  15. ^ a b c "Fund Profile: Kuwait Investment Authority (KIA)" (PDF). pp. 1–3.
  16. ^ "The Vital Role of Sovereign Wealth Funds in the GCC's Future".
  17. ^ "Kuwait's Future Generations Fund" (PDF). p. 2.
  18. ^ "Patents By Country, State, and Year – All Patent Types". United States Patent and Trademark Office. Retrieved 12 March 2016.
  19. ^ "Arab World to have more than 197 million Internet users by 2017, according to Arab Knowledge Economy Report". To date, the United States Patent and Trademark Office (USPTO) have granted 858 patents to the Kingdom of Saudi Arabia, positioning it 29th in the world. Kuwait is at second place with 272 patents and Egypt at third with 212 patents, so far.
  20. ^ a b "Arab Economy Knowledge Report 2014" (PDF). pp. 20–22.
  21. ^ "UNESCO Science Report 2005" (PDF). p. 162.
  22. ^ a b c "A Mixed Bag of Scientific Commitment". MIT Technology Review. Archived from the original on 13 July 2016. Retrieved 12 March 2016.CS1 maint: BOT: original-url status unknown (link)
  23. ^ "Regional Profile of the Information Society in Western Asia" (PDF). p. 53.
  24. ^ "Arab states" (PDF). pp. 264–265.
  25. ^ "Science and Technology in the OIC Member Countries" (PDF). p. 7.
  26. ^ a b "Kuwait Sees Fastest Growth of GCC Countries in Obtaining U.S. Patents". Yahoo News. Retrieved 12 March 2016.
  27. ^ Al-Kharafi, Naeimah (12 October 2014). "Encouraging social entrepreneurship in Kuwait – Special report". Kuwait Times.
  28. ^ Saltzman, Jason (11 November 2014). "Keeping Up With Kuwaiti Connection: The Startup Circuit In Kuwait Is Up And At 'Em". Entrepreneur Middle East.
  29. ^ Etheridge, Jamie (27 February 2014). "What's behind the growth of Kuwait's informal economy". Kuwait Times.
  30. ^ Greenfield, Rebecca (12 July 2013). "In Kuwait, Instagram Accounts Are Big Business". The Wire: News for the Atlantic.
  31. ^ Kuo, Lily; Foxman, Simone (16 July 2013). "A rising class of Instagram entrepreneurs in Kuwait is selling comics, makeup and sheep". Quartz.
  32. ^ "Kuwait's booming Instagram economy". kottke.org. 12 July 2013.
  33. ^ al-Wazir, Yara (23 August 2014). "How Kuwaitis are Instagramming a business revolution". Al Arabiya News.
  34. ^ "Travel & Tourism Economic Impact 2015" (PDF). World Travel & Tourism Council.
  35. ^ "Kuwait's investments in travel and tourism sector to grow by 4.3% per annum". BQ Magazine.
  36. ^ "Kuwait tenth in total Arab countries' tourism revenue".
  37. ^ a b "Hala February kicks off with a bang". Kuwait Times.
  38. ^ "Hala Febrayer 2016 Carnival attracts thousands of participants". Al Bawaba.
  39. ^ "Ooredoo Sponsors Kuwait's Biggest Annual Festival".
  40. ^ "Flag-hoisting ceremony signals start of Kuwait national celebrations of 2017". Kuwait Times. 3 February 2017. Archived from the original on 3 February 2017. Retrieved 25 February 2017.
  41. ^ "Employment in agriculture (% of total employment) (modeled ILO estimate) | Data". data.worldbank.org. Retrieved 24 April 2018.
  42. ^ a b "general profile". Food and Agriculture Organization of the United Nations. Retrieved 22 April 2018.
  43. ^ "Public Transport Services". Kuwait Public Transportation Company. Retrieved 17 March 2015.
  44. ^ "Public Transport Services". KGL. Archived from the original on 2 February 2011.
  45. ^ "First flight for Kuwait's Jazeera Airways". The Seattle Times. 31 October 2005.
  46. ^ "Kuwait's ports continue to break records – Transportation". ArabianBusiness.com. 4 June 2007. Retrieved 28 June 2015.
  47. ^ John Pike. "Mina Al Ahmadi, Kuwait". Globalsecurity.org. Retrieved 28 June 2015.
  48. ^ "Report for Selected Countries and Subjects". Retrieved 8 September 2018.

External links[edit]

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