World Bank Downgrades Kuwaiti Economic Growth Forecast to 0.8%

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KUWAIT CITY, Oct 6: The World Bank has revised its projections for Kuwait’s economic growth in 2023, anticipating a decrease in the citizen’s share of GDP by 0.1 percent. The Bank now forecasts a growth rate of 0.8 percent for the Kuwaiti economy, down from its previous estimate of 1.3 percent. This is a significant drop compared to the 7.9 percent growth the Kuwaiti economy experienced last year. However, the World Bank anticipates a rebound in growth to about 2.6 percent for the following year, reports Al-Rai daily.

In a recent report titled “Achieving Balance, Jobs, and Wages in the Middle East and North Africa Region During Crises,” the World Bank predicts a contraction of approximately 0.1 percent in real GDP per capita in Kuwait for the current year. This is in stark contrast to the robust growth of 7.4 percent recorded in 2022. However, there is an expected recovery with per capita growth projected to be around 1.7 percent in 2024.

On a positive note, the World Bank has revised its expectations for the current account surplus as a percentage of GDP for this year, forecasting a surplus of 23.1 percent, up from the 22 percent estimated in April. It is expected to decrease slightly to 19.1 percent in 2024, after reaching 26.3 percent in 2022.

In terms of public finance balance, the World Bank predicts a deficit of about 8 percent of GDP for this year, a significant shift from the surplus of 2.2 percent achieved last year. The deficit is expected to widen to 10.7 percent next year. Additionally, the Bank has raised its inflation projections for Kuwait in 2023 from 2.6 percent (as stated in its April report) to the current estimate of 3.3 percent. However, inflation is anticipated to decrease to 2.4 percent in 2024.

Looking at the broader Middle East and North Africa region, the World Bank anticipates a decline in GDP growth to 1.9 percent this year, compared to the 6 percent seen in 2022. This decline is attributed to reduced oil production, low oil prices, tightened global financial conditions, and high inflation.

The decline in growth is expected to be particularly prominent in oil-exporting Gulf Cooperation Council countries, with real GDP growth projected to reach only 1 percent in 2023, a sharp drop from the 7.3 percent recorded last year and lower than the Bank’s expectations from April. These changes are due to reduced oil production and prices.

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