Kuwait’s economy to shrink by 1.4%: IMF

KUWAIT CITY, May 11, (KUNA): The Central Bank of Kuwait (CBK) announced on Thursday that the International Monetary Fund (IMF) estimated real economic activity in Kuwait had fallen by 2.2 percent in 2023.

A press release by the CBK revealed that number came from the IMF report following their delegation’s visit to Kuwait from April 30 to May seventh, which came to convey preliminary findings.

It indicated that the IMF said the oil sector contracted by 4.3 percent due to an OPEC+ production quota cut in May, and the non-oil sector expanding by only 0.8 percent amid subdued domestic demand growth.

The IMF delegation added that the economy “is projected to contract by a further 1.4 percent in 2024, with oil production falling by another 4.3 percent due to the OPEC+ quota cut in January. The non-oil sector is expected to expand by 2.0 percent as domestic demand growth picks up, compared to 3.6 percent average growth for the GCC.”

The IMF report commended the CBK for its measures, saying “Given prudent financial regulation and supervision by the CBK, banks have maintained strong capital and liquidity buffers, while their profitability has rebounded from pandemic lows, and non-performing loans remain low and well provisioned for. It is crucial to preserve the CBK’s independence in implementing its mandate.”

“Financial stability has been maintained in spite of tighter financial conditions. Growth in credit to the nonfinancial private sector continued to fall in 2023, to only 1.8 percent as bank lending rates rose in response to gradual policy rate hikes by the CBK broadly in line with global monetary policy tightening which helped control inflation,” stated the IMF report.