Discusses key economic indicators and trade statistics, which countries are dominant in the market, and other issues that affect trade.
Kuwait is located in the northeast corner of the Arabian Peninsula, at the head of the Arabian Gulf. Bordered to the north and west by Iraq, to the south and west by Saudi Arabia, and to the east by the Arabian Gulf, Kuwait occupies a strategic position in this vital region. Kuwait is a member of the six-nation Gulf Cooperation Council (GCC). Approximately one-third of an estimated population of 4.6 million are Kuwaiti nationals. The remainder of the population consists of expatriate residents hailing from more than 80 countries. The oil industry and government sector dominate the economy, with crude oil reserves estimated at nearly 101.5 billion barrels, or approximately 7% of the world’s reserves. The oil industry accounts for over half of GDP and 94.4% of government revenues. With oil the main natural resource, oil refining and downstream petrochemical processing are the dominant industries. Non-petroleum manufacturing and agricultural sectors are limited, consisting of a switch-gear manufacturer for power sub-stations, and factories for building materials, furniture, and food packaging.
In 2010, the parliament passed a five-year $104 billion development plan that aimed to upgrade infrastructure and diversify the economy away from oil. In 2015, the government adopted a new development plan (2015-2020) that focused on economic reform and the implementation of several long-stalled mega-strategic projects that were not implemented under the preceding plan. While the majority of government-funded projects move slowly, several major projects were expedited in recent years. The COVID-19 pandemic and the low oil prices have significantly impacted Kuwait’s 2020-2021 budget as the country is expected to report a deficit of $46 billion. The budgest situation has resulted in Kuwait cancelling or postponing major infrastructure projects such as the long planned Al-Debdebah Solar Power plant and putting other projects on hold until further notice. Currently, the Minisitires have approved the preliminary steps to issue consultancy tenders and pre-qualify companies in preparation of releasing solicitations/tenders in the second half of 2021.
Kuwait imports most of its capital equipment, processed foods, manufacturing equipment, and consumer goods. Two-way trade is limited to a few international partners. Almost half of the country’s imports originate from China, the United States, the United Arab Emirates (UAE), Japan, and Germany, while over 50% of Kuwait’s export earnings are attributable to South Korea, China, India, Japan, and the United States. The United States remains a leading strategic trade partner. In 2019, U.S. exports to Kuwait were valued at $3.17 billion, while U.S. imports from Kuwait stood at $1.41 billion, primarily driven by petroleum products. Kuwaitis frequently travel to the United States, with approximately 10% of Kuwaiti high-school graduates continuing their education at U.S. colleges and universities. Americans and U.S. brands, as well as products, are warmly welcomed due to familarity with U.S. culture. Although Kuwaitis are extremely price-conscious, they are also avid consumers. While Chinese and Indian goods increasingly dominate low-end imports, high quality U.S. exports remain relatively competitive in Kuwait.
According to the Kuwait’s Central Statistical Bureau, Kuwait’s nominal Gross Domestic Product (GDP) was approximately $130 billion in 2019 with 0.4% growth from the previous year. Kuwait’s current oil production capacity is estimated at 3.15 million barrels per day. The government hopes to increase production capacity to 4.75 million barrels per day by 2040. In order to reach this goal, Kuwait must continue spending and investing in upgrading downstream facilities as well as on upstream oil development.
Transportation equipment, including automobiles and automotive parts, accounted for 32.8% of non-military U.S. exports to Kuwait in 2019. Oil and gas field equipment, telecommunications and IT equipment, medical equipment, and electronics were also leading export sectors for U.S. firms.