The “Intelligence” division of The Economist predicted that bureaucracy and the political split between the executive and legislative branches, if it persists in Kuwait as it has in the past, will turn off some investors and impede joint venture initiatives between the public and private sectors.
This will probably have a detrimental effect on the nation’s business climate between 2023 and 2027 and lessen long-term economic prospects.
The unit’s assessment predicted that real GDP would stabilise in 2023 and 2024 after seeing high growth in 2022 and 2023 as a result of the rise in oil prices and the lifting of production limitations imposed by the “OPEC Plus” coalition.
Additionally, he estimated that oil production will rise by 6% to an average of 2.
Due to the end of the “OPEC Plus” production restrictions and the increased production capacity at the Al-Zour refinery, 85 barrels per day will be produced in 2023.
modest expansion
Nevertheless, despite the boost in oil output, “Economist Intelligence” predicted that the real GDP growth, which is anticipated to average 8% between 2022 and 2023, will decrease to a level of 4% since the increase in oil production will not be sufficient to make up for it. worldwide pricing reduction
According to The Economist Intelligence, growth will average 1.5% for the remaining portion of the projected period. With the fall in oil prices, domestic output will increase slowly in the years 2024–2025–2027–2028, producing a halt in export growth as well as government and private consumption.
She noted that Kuwait will maintain the current peg of its currency during the forecast period given the financial stability it achieves for the country, indicating that the authorities can rely on the support of the General Investment Authority and the estimated foreign exchange reserves at the end of the quarter. She also explained that the increase in interest rates locally and globally will deter investments. The number 46 was the second of 2022. 8 billion dollars, gold excluded.
Between 2023 and 2027, the unit anticipated that the dinar would remain stable versus the dollar, averaging 0. 306 per dollar, aware that it is correlated to a varied basket of different currencies with the dollar as the dominant currency.
monetary strategy
The “Economist Intelligence” anticipated that the US Federal Reserve would announce a series of interest rate increases by 2022-2023 after increases totaling 225 basis points between last March and July. It also anticipated that the Central Bank of Kuwait would maintain the current peg to the currency.
The discount rate will increase on September 21 by a quarter point to 3 percent from 1 percent, the Central Bank of Kuwait announced.
5% that was slated to be implemented at the end of 2021.
By the end of the year, the unit anticipated that the Federal Reserve would increase interest rates by an additional 150 basis points. Additionally, it anticipated the Central Bank would follow suit without responding by increasing the rate from the existing 3 percent to 3. by the end of the year, 5%.
She mentioned the potential that the United States will attain its goal inflation rate in 2024, which will cause interest rates in Kuwait and the United States to moderate between 2024 and 2025 and then drop by the end of 2027.
worldwide height
According to the research, Kuwait’s price inflation rate increased to an anticipated 5.
After seeing 4.5% growth in 2021, prices for food and raw materials are expected to climb by 5.0% in 2022 as a result of the Russian-Ukrainian conflict. August 2017 saw an annual decline of 15%.
He anticipated that Kuwait’s inflation will drop to 3. 2 percent in 2023 as a result of the monetary policy gradually tightening starting in 2022 and the relatively stable budget position, which helps to counterbalance the minor increase in imported inflation brought on by a weaker dollar.
whereas “Economist Intelligence” anticipated a rate of inflation of about 2. If a value-added tax is implemented, it predicted a 1. 3 percent increase in 2024-2025. The average rate for 2026 and 2027 was 4%.
The five-year development strategy is overly comprehensive. . . According to The Economist Intelligence, political gridlock and a slow bureaucracy will limit the five-year development plan’s ability to achieve its overly ambitious targets.
Regarding the Kuwaitiization process, she outlined the steps taken to reduce the number of foreign workers in the public sector as a result of rising Kuwaiti demand for employment. It is anticipated that as a result of increased parliamentary pressure to accelerate Kuwaitization efforts, the proportion of expatriates in the labour force will decline between 2023 and 2027.
As a result of Kuwaitis’ lack of skills and unwillingness to perform many of the low-skill jobs performed by foreign employees, it was suggested that companies will continue to struggle to replace local workers with expatriates in various industries.
She emphasised that the government still offers Kuwaitis employment options in the public sector, with an emphasis on extra training to enhance skills, with the primary goal of upholding the social compact with citizens. .
The Economist: Kuwait’s real output will expand strongly in 2022… and its consistency throughout the following two years
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