29 March 2019
Kuwait: Increase Public Investment to Support Growth
|Form of government||Constitutional emirate (monarchy)|
|Major Merchandise Exports (% of total, 2016*)||Major Merchandise Imports (% of total, 2016*)|
|Oil & oil products (88.9%)||Intermediate goods (40.0%)|
|Non-oil (11.1%)||Consumer goods (40.0%)|
|Capital goods (20.0%)|
|Top Three Export Markets (% of total, 2017) ||Top Three Import Markets (% of total, 2017)|
|South Korea (16.0%)||China (16.4%)|
|China (15.2%)||US (10.2%)|
|India (10.5%)||UAE (8.7%)|
*Most recent data available
Source: Economist Intelligence Unit
Kuwait is a constitutional monarchy. The Emir of Kuwait is the monarch and head of state of Kuwait, which is under the hereditary rule of the Al-Sabah family. The emir, Sheikh Sabah al‑Ahmad al-Jaber al-Sabah, appoints the prime minister and the government, in which the ruling royal family usually holds key ministries. The national legislature is a unicameral National Assembly made up of 50 directly elected members and 15 unelected cabinet ministers. The next legislative election will be due in 2020.
The rivalry between its neighbors, Saudi Arabia and Iran, ongoing boycott of Qatar by the quartet of Saudi Arabia, the UAE, Bahrain and Egypt, and the presence of jihadi groups remain the key concerns over regional stability. The country is increasing focus on keeping the Gulf Co-operation Council (GCC) unity intact and developing a closer security ties with its neighbors.
|Nominal GDP (USD bn)||109.4||119.5||134.4||142.9||150.3|
|Real GDP growth (%)||2.9||-3.5||1.5||3.2||2.8|
|GDP per capita (USD)||25,280||26,570||28,790||29,530||30,020|
|Budget balance (% of GDP)||2.9||-8.7||-0.6||-1.4||-2.1|
|Current account balance (% of GDP)||0.6||6.5||10.3||9.2||8.6|
|External debt (% of GDP)||34.6||41.1||43.0||41.2||40.2|
Source: Economist Intelligence Unit
Kuwait is one of the richest Arab countries. It is the world’s ninth-largest crude oil producer and its oil reserves are the world’s seventh largest. The oil and gas sector remains the backbone of the economy with hydrocarbon products accounting for around 55% of the total GDP and over 90% of total exports. The GDP contracted in 2017 due to lower oil output on the back of the Organization of the Petroleum Exporting Countries (OPEC) agreement to cut production. Nevertheless, the country maintains a sovereign wealth fund with sizeable foreign assets derived from its current account surpluses, which provides policy space to increase public investment to support growth.
In January 2019, Standard and Poor’s (S&P) affirmed Kuwait’s long-term issuer debt rating at ‘AA’ with a stable outlook. The stable outlook reflected S&P’s expectation that Kuwait’s public and external balance sheets will remain strong over the next two years, supported by its sovereign wealth fund. This should partially mitigate the risks related to the country’s undiversified oil-dependent economy, and rising geopolitical tensions in the region.
Hong Kong-Kuwait Trade
Total exports from Hong Kong to Kuwait decreased by 5.4% from HK$1,221 million in 2017 to HK$1,155 million in 2018. The top three export categories to Kuwait were: (1) telecommunications and sound recording and reproducing apparatus and equipment (+3.2%), (2) office machines and automatic data processing machines (-8.2%), and (3) photographic apparatus, equipment and supplies and optical goods; watches and clocks (+15.7%), which represented 71.7% of total exports to Kuwait.
HKECIC Underwriting Experience
The HKECIC imposes no restrictions on covering Kuwait buyers. Currently, the insured buyers in Kuwait are mainly small and medium sized companies. For 2018, the number and amount of credit limit applications on Kuwait increased 25% and decreased 1.1% respectively, while insured business increased by 94.1%. Major insured products were furniture, jewellery, and electrical appliances, which represented 42.2% of HKECIC’s insured business on Kuwait. The Corporation’s underwriting experience on Kuwait has been satisfactory, with one claim case reported during February 2018 to January 2019, involving furniture.