- The economy is recovering amid higher oil production and robust non-oil growth. Non-oil growth is projected to strengthen this year.
- Inflation continues to moderate, but lower oil prices are weighing on the fiscal and external balances. Financial stability has been maintained, supported by prudent regulation and supervision by the CBK.
- The risks to the economic outlook are broadly balanced. Given its oil dependence, the economy is heavily exposed to volatility in oil prices and production.
- Progress has been made with fiscal and structural reforms. Accelerating reform implementation is needed to promote economic diversification, enhance competitiveness, and boost non-oil growth.
Kuwait City, Kuwait: An International Monetary Fund (IMF) mission, led by Mr. Francisco Parodi, held discussions with the Kuwaiti authorities in Kuwait City during September 15 – 22, 2025. At the conclusion of the mission, Mr. Parodi issued the following statement:
"The economy is recovering amid higher oil production and robust non-oil growth. Real GDP contracted by 2.6 percent in 2024, driven by a 6.9 percent fall in oil sector output due to OPEC+ production cuts, despite 1.8 percent non-oil growth supported by resilient private domestic demand. An incipient recovery is underway, with real GDP expanding by 1.0 percent (y-o-y) in 2025Q1. For 2025, real GDP is projected to expand by 2.6 percent, with the recent unwinding of OPEC+ production cuts increasing oil sector output by 2.4 percent, and non-oil growth rising to 2.7 percent on the back of stronger private domestic demand.
"Inflation continues to moderate, but lower oil prices are weighing on the fiscal and external balances. Headline CPI inflation declined to 2.9 percent in 2024, reflecting a fall in core CPI inflation to 2.4 percent. Headline CPI inflation is projected to moderate further to 2.2 percent in 2025, given gradually declining outturns so far this year (2.3 percent y-o-y in July) and projected stability in import prices for the remainder of the year. The fiscal deficit of the budgetary central government is projected to rise to 7.8 percent of GDP in FY2025/26, up from 2.2 percent of GDP in FY2024/25, primarily reflecting lower oil revenue. In parallel, the current account surplus is projected to moderate to 26.5 percent of GDP in 2025, down from 29.1 percent of GDP in 2024, mainly due to lower oil exports.
"Financial stability has been maintained. Supporting strong private domestic demand, growth in credit to the nonfinancial private sector is projected to increase to 6.1 percent in 2025, up from 5.2 percent in 2024, given its pace so far this year (6.7 percent y-o-y in July). Banks have maintained strong capital and liquidity buffers, while non-performing loans remain low.
"The risks to the economic outlook are broadly balanced. The economy is heavily exposed in the short-run to upside and downside risks from shifts in oil prices and OPEC+ production quotas, which could arise from fluctuations in global growth, geopolitical tensions or non-OPEC+ supply.
"Progress has been made with fiscal and structural reforms. The 15 percent CIT was extended to cover all large multinational companies in January 2025. Furthermore, a new Public Debt Law was enacted in March 2025, enabling the government to issue debt for the first time in almost a decade. Accelerating reform implementation is needed to promote economic diversification, enhance competitiveness, and boost non-oil growth.
"The IMF mission team thanks the authorities for their hospitality and the productive discussions. We look forward to continuing our dialogue and close collaboration."
