Kuwait’s oil sector slump drives GDP contraction

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KUWAIT CITY, Feb 27: According to the Al-Shall Center’s weekly report, the Central Administration of Statistics released estimates regarding the gross domestic product (GDP) for the third quarter of 2023 compared to the same period in 2022, reports Al-Jarida daily. At current prices, the GDP amounted to approximately 12.7 billion dinars, showing a contraction of 11.7% compared to the third quarter of 2022, which stood at about 14.4 billion dinars. Similarly, the GDP at constant prices for the third quarter of 2023 was about 9.8 billion dinars, reflecting a contraction of about 3.7% compared to the previous year’s figure of approximately 10.2 billion dinars. These contractions are attributed to a decline in the added value of the oil sector, which saw a decrease of 22.1% at current prices and about 9.0% at constant prices. This underscores the economy’s heavy reliance on oil despite promises to diversify income sources

Production
In 2023, Kuwait reduced its oil production by approximately 263 thousand barrels per day, or 9.8%, coinciding with a decline in the average price per barrel by about 15.5 US dollars, or 15.6% compared to 2022. The dominance of oil over the economy is evident in its contribution to the GDP, decreasing from 57.6% in the third quarter of 2022 to 50.8% in the third quarter of 2023. These changes are tied to fluctuations in oil production levels and global market prices, variables beyond local administrative control.
Moreover, the suspension of GDP data publication for two years during the pandemic raises doubts about the accuracy of the figures, highlighting a disconnect between public policies and economic realities. The delayed release of GDP figures, five and a half months after the end of the period, underscores a lack of awareness of their significance compared to other countries’ practices. While the current government’s program shows promise in addressing economic sustainability issues, there are concerns about potential populist tendencies and the sustainability of public finances if certain provisions are implemented without careful consideration. Effective financial and economic reform necessitates accurate and timely data and indicators. The government’s success in translating its program into action will be the true measure of its awareness and commitment to addressing economic challenges.

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