Kuwait’s economy is projected to remain in recession in 2024, contracting by 2.8 percent due to continued Organization of the Petroleum Exporting Countries and its allies (OPEC+) production cuts, before recovering in the medium term. Real GDP is expected to grow by 2.6 percent in 2025 as the cuts are unwound. The non-oil sector’s recovery will continue, with non-oil GDP expanding by 2.0 percent despite fiscal consolidation, and real credit growth picking up.

“The economy is projected to remain in recession under the baseline in 2024, then to recover over the medium term,” the International Monetary Fund (IMF) said a week after OPEC+ announced it was extending voluntary cuts of 2.2 million barrels per day until April 2025.

Kuwait’s GDP contracted by 3.6% last year due to fluctuations in the oil sector. In Q2 of 2024, the country reported a 1.5% year-on-year GDP dip but observed a 4.2% rebound as a result of its nascent non-oil sector. 

The IMF report indicates that lower oil prices and production have weakened Kuwait’s external and fiscal balances, although financial stability has been preserved. The external position remains robust, with the current account surplus narrowing to 31.4% of GDP in 2023, and official reserve assets standing at $47.6 billion by the end of 2023—sufficient to cover 9.2 months of projected imports.

Kuwait’s headline CPI inflation has significantly declined over the past two years, falling to 3.6% in 2023 as price pressures across key categories eased. This reduction was primarily driven by decreases in core and food inflation. Inflation dropped further in September, reflecting a continued moderation in price pressures across major categories, influenced by global and domestic factors such as subdued economic growth, lower commodity prices, and stabilized supply chains.

The IMF consultation emphasized that Kuwait’s economy remains highly vulnerable to global growth fluctuations and oil price volatility, challenges that are compounded by ongoing regional tensions.