14 Jan, 2020

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Kuwait

Kuwait was the 56th largest economy in the world by nominal GDP in 2018. Its GDP per capita was $34,244 USD. It is situated on the Persian Gulf bordering Iraq and Saudi Arabia. It had the seventh largest proven oil reserves in the world in 2018. It was ranked 57th in the Economic Complexity Index in 2017. It is a member of the GCC and OPEC. Services was the largest economic sector in 2017 (59 percent of GDP), followed by manufacturing (7 percent), and agriculture (0.51 percent). In 2017, the largest export sectors were minerals (79 percent), services (9.07 percent), and chemicals (6.75 percent). The largest individual exports were crude oil (62 percent), refined petroleum (13 percent), and ICT services (4.9 percent). Its largest export partners were South Korea (17.2 percent), China (16.04 percent), India (11.3 percent), and Japan (10.6 percent). The largest goods imports were transmission apparatus for radio, telephones, and television (7.14 percent), and cars (6.61 percent). By the 19th century, Kuwait had become an important trading and pearling centre in the gulf region. Fearing an increase in Ottoman control, it became a British protectorate in 1899. After World War One, Ibn Saud attempted to capture Kuwait but after failing he imposed a trade blockade that lasted until 1937. Under the blockade and the Great Depression the economy suffered. In 1938, oil was discovered transforming the economy. The government used its new wealth to invest in infrastructure and to establish two key funds. In 1953, it established the world's first sovereign wealth fund, now called the Kuwait Investment Authority. And in 1961, it established a regional development fund, the Kuwait Fund for Arab Economic Development, which has now expanded its aid to over 100 countries. In 1961, Kuwait became an independent country as the British withdrew from the gulf states. The oil and gas industry were nationalised in 1975. The economy suffered during the early 1980s as the oil price fell, the 1982 Souk al-Manakh stock market crash, and the impact from the Iran-Iraq war. Similarly, the economy suffered in 1990 and 1991 after Iraq invaded in 1990. Following liberation, the economy rebounded and grew strongly in the 2000s as the oil price recovered. After the drop in the oil price in 2014-2015, the budget came under pressure. The government responded by further cuts to fuel and electricity subsidies and by agreeing with other GCC members to introduce an excise tax on tobacco and alcohol and a VAT. In 2017, the government launched the "New Kuwait Vision 2035" development plan. The plan aims to further diversify the economy building on earlier development plans.