Economic plans to move away from oil dependence of Kuwait are at least. What do you expect? Oil is still about 60% of Kuwait’s GDP. It’s the most oil-dependent country in the Gulf but the country’s kind of facing the same issues as every other Gulf nation in terms of lower oil prices and how to adjust to that?
Can Kuwait move away from oil dependence?
The increased consumer spending and there’s more of an appetite for foreign investment. So last year their non-oily economy grew by 3.3 percent. That’s up 2 percent from the year before that. So things are moving along quite quickly in that regard. One of the main things is project spending.
The planning of Kuwait
There was recently something called the Kuwait Investment Forum and there they unveiled something called the northern Gulf Gateway plan which was kind of a plan to completely redevelop the northern part of Kuwait.
This is a really very substantial project but it’s supposed to add 220 billion to the country’s GDP as well as attract two hundred billion and foreign investment from all over Europe to Asia from elsewhere in the Middle East.
It’ll also create 400,000 jobs and attract 3 to 5 million visitors once the project is completed. Is it an economic zone like a neon kind of plan? It is kind of a neon sort of a megacity sort of project that uses.
There must be significant foreign interest in this project and in particular from China because China sees Kuwait is kind of a key part of its one belt one Road initiative which is a one trillion dollar project to build a new Silk Road from Asia to Europe.
It’s very substantial so the Chinese firms are very involved in that project. In Kuwait Silk City or the five islands that meant that Kuwait’s doing off its coast because China considers this very important spot on the New Silk Road.
Both authorities starting to pay off Chinese and Kuwait bilateral trade has reached 12 billion which is a 26 percent increase from the year before which is a very substantial increase for one year.
So in particular China is the one that’s kind of driving a lot of these projects in China apart from the Kuwait market. Kuwait would be a very good entry point into Iraq when the country gets back on its feet a little more of course.
That’s why they chose quake. It’s very well situated. There you have Iran there you have the rest of the Gulf and also you’re on the way to the other markets like Turkey, and Europe.
It’s kind of in a very perfect location for Chinese purposes. Now there’s been other changes recently to the stock market to encourage investment. This is also quite significant.
Can Kuwait Move Away From Oil Dependence?
So what they’ve done now is they’ve divided the bursa Kuwait into three distinct segments and the idea is that this will attract investors and IPOs and help make everything more transparent.
So analysts now have kind of a very positive in the medium and the long terms about the Kuwaiti stock market and that’s, in turn, going to help different sectors particularly banking because finance companies are very well represented on the Kuwaiti stock market and it’ll also help them get revenue for these infrastructure projects that they’re doing at the moment.
Oil is still overwhelmingly the main driver for their economy and they’ve been investing a lot recently or announced plans to invest heavily in the oil and gas sector.
Final Verdict
They’re hedging their bets because just last week actually the Kuwait Petroleum Corporation pledged to spend five hundred billion to boost capacity by 2040 to four point seven billion barrels and of that 114 billion dollars will be spent in the next five years.
This is going to put their output ahead of Iraq and Iran which are the other the second and third largest oil producers after Saudi Arabia. So they’re there certainly not turning their back on their traditional moniker sound.
It can’t but they give themselves options. It as with is the case in Saudi Arabia and the UAE they’ve kind of seen the writing on the wall but only having oil as the primary thing that making money is not going to work anymore. So Kuwait; they have got plans to move their own economy away from just being based on oil.
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