Discusses key economic indicators and trade statistics, which countries are dominant in the market, and other issues that affect trade.
Note: The global COVID-19 pandemic and worldwide economic downturn impacted Kuwait, as it did every country around the world. As the pandemic continued in 2021, oil prices began to rebound as the world’s economy started to recover, and the non-oil economy began to emerge from the severe declines in the infrastructure, aviation, trade, and logistics sectors in 2020. Economic projections remain uncertain. Every effort has been made to use the latest data, yet much of the available data is from 2019, 2018, and recent years. Please contact our office for updates and the latest information.
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 90% of government export 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 2017, the government adopted a new development plan “Kuwait Vision 2035” focused on economic reform designed to empower the private sector and transform Kuwait into a regional trade and investment hub. Objectives of Kuwait Vision 2035 include upgraded infrastructure and diversification of the economy away from oil. While the majority of government-funded projects move slowly, several major projects were awarded in recent years. Recovering oil prices have improved the 2021-2022 budget, with a projected budget deficit of around $15 billion. The budget deficit has resulted in Kuwait canceling or postponing major infrastructure projects and putting other projects on hold until further notice.
Kuwait imports most of its capital equipment, 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 2020, U.S. exports to Kuwait were valued at $2.2 billion, while U.S. imports from Kuwait stood at $714 million, primarily driven by petroleum products. Kuwaitis frequently travel to the United States, with approximately 10,000 Kuwaiti students continuing their education at U.S. colleges and universities. Americans and U.S. brands, as well as products, are warmly welcomed due to familiarity 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 Kuwait’s Central Statistical Bureau, Kuwait’s nominal Gross Domestic Product (GDP) for 2020 was $118.8 billion US dollars according to Kuwait Central Statistical Bureau. In 2021, the Central Bank of Kuwait announced that Kuwait’s GDP had contracted 9.9% in 2020 from 2019 mainly due to sharp decrease in oil prices. 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.