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Plan to improve Kuwait’s Economy
The National Observatory for Sustainable Development and Future Foresight, under the General Secretariat of the Supreme Council for Planning and Development, has urged the presentation of a national strategy aimed at enhancing Kuwait’s economy through investment system. This strategy aims to safeguard investors through the introduction of initiatives and measures to incentivize their active participation, along with the implementation of economic protection schemes for all societal segments to elevate living standards.
This call is part of a series of recommendations outlined in a report issued by the Observatory to bolster economic freedom in Kuwait. Notably, Kuwait ascended 18 places globally on the Economic Freedom Index, securing the 90th spot in 2024 compared to 108th in 2023. The report also positioned Kuwait sixth among Arab and Gulf nations, reflecting its economic freedom surpassing the regional average for 2024.
The report highlights Kuwait’s openness to foreign investment, albeit with some sectors still restricted, requiring liberalization. Additionally, the modern financial regulatory framework facilitates portfolio investment, while the well-capitalized banking sector contributes to monetary freedom exceeding the global average.
2024 Findings
The Economic Freedom Index for 2024 showcases significant improvements in several indicators for Kuwait. For instance, the Business Freedom Index surged by 9.36% to 65.2 in 2024 compared to 59.1 in 2023, while the Freedom to Trade Index remained steady at 75.6. The report also commends Kuwait’s achievements in government spending and budget management over three consecutive years, alongside a reduction in public debt as a percentage of GDP to 3.1%.
In light of these findings, the report issues ten recommendations to further enhance economic freedom in Kuwait. These include proposing a national strategy to transform Kuwait into a global financial hub, diversifying income sources, achieving economic sustainability, enhancing human capital investment, establishing an integrated electronic portal for the financial sector, and promoting good governance practices. Additionally, recommendations focus on bolstering the rule of law, optimizing financial sector performance, and ensuring economic protection for all societal strata.
What is the main driver of Kuwait’s economy?
Kuwait’s economy is primarily driven by its vast oil reserves. Oil exports account for the majority of the country’s GDP and government revenues. Kuwait is one of the wealthiest countries in the world due to its large oil wealth.
How has Kuwait’s economy evolved over time?
Prior to the discovery of oil in the 1930s, Kuwait’s economy was based on pearl diving, fishing, and maritime trade. After oil was discovered, Kuwait rapidly transformed into one of the richest countries in the world, with a per capita GDP among the highest globally. However, Kuwait has faced challenges in diversifying its economy beyond oil and gas.
What steps is Kuwait taking to diversify its economy?
As part of its “Kuwait Vision 2035” plan, the government is working to reduce the country’s reliance on oil by diversifying into other sectors like manufacturing, financial services, tourism, and renewable energy.This includes efforts to attract foreign investment and make the business environment more attractive for non-oil industries.
How does Kuwait’s wealth distribution compare to other countries?
Kuwait has a large wealth gap, with a small Kuwaiti population controlling the majority of the country’s wealth and resources. Around 70% of Kuwait’s population are non-Kuwaiti expatriate workers, many of whom work in low-wage jobs. This has led to an imbalance in the distribution of the country’s prosperity.
What are some of the challenges facing Kuwait’s economy?
Despite its vast oil wealth, Kuwait’s economy faces challenges such as a large public sector, heavy reliance on oil exports, and a rapidly growing young population that will require more jobs in the future. The government has been slow to implement economic reforms and diversification efforts, which could pose risks if oil prices decline.
How does Kuwait’s economy compare to other Gulf states?
Compared to other Gulf Cooperation Council (GCC) countries, Kuwait’s economic growth has lagged behind its neighbors in recent years. While Kuwait has a strong fiscal position due to its oil wealth, its political stagnation has hindered economic reforms and diversification efforts seen in places like the UAE and Saudi Arabia.