Knowledge Note

"Large financial assets underpin Kuwait’s economic resilience, but fiscal and structural reform are key to offset the risks of lower oil prices."

While performance in 2020 will suffer from the twin shocks of COVID-19 and the oil price slump, growth in Kuwait has been tapering since 2014. The inevitable fiscal deficit increase from declining oil revenue and crisis mitigation spending and funding needs for the Future Generations Fund is exacerbating pressure on fiscal buffers, in the absence of a debt law. While less exposed to internationally hard-hit sectors than its GCC neighbors, long-standing rigidities will impede adjustment to the protracted COVID-19 shock.