Kuwait’s Real GDP to Expand 2.6% in 2025

Kuwait’s economy is recovering amid higher oil production and robust non-oil growth, while the real GDP contracted by 2.6% in 2024, driven by a 6.9% fall in oil sector output due to OPEC+ production cuts, despite 1.8% non-oil growth supported by resilient private domestic demand, the International Monetary Fund (IMF) said.

An IMF mission which held discussions with the Kuwaiti authorities in Kuwait City between 15 and 22 September 2025, said that an incipient recovery is underway, with real GDP expanding by 1% y-o-y in Q1 2025.

“For 2025, real GDP is projected to expand by 2.6%, with the recent unwinding of OPEC+ production cuts increasing oil sector output by 2.4%, and non-oil growth rising to 2.7% on the back of stronger private domestic demand,” the IMF team noted.

While inflation continues to moderate, lower oil prices were weighing on the fiscal and external balances. Headline CPI inflation declined to 2.9% in 2024, reflecting a fall in core CPI inflation to 2.4%.

The IMF said that headline CPI inflation is projected to moderate further to 2.2% in 2025, given gradually declining outturns so far this year (2.3% 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% of GDP in the financial year (FY) 2025-26, up from 2.2% of GDP in FY 2024-25, primarily reflecting lower oil revenue.

In parallel, the current account surplus is projected to moderate to 26.5% of GDP in 2025, down from 29.1% 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% in 2025, up from 5.2% in 2024, given its pace so far this year (6.7% y-o-y in July).

Banks on Sound Footing

The Kuwaiti banks have maintained strong capital and liquidity buffers, while non-performing loans remain low, the IMF said.

It further said that 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% 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. However, accelerating reform implementation is needed to promote economic diversification, enhance competitiveness, and boost non-oil growth,” the IMF concluded.