EU Portal .net

Economy Of Kuwait

Economy in greater depth

Kuwait is one of the richest countries in the Muslim world. Current GDP per capita reached astonishing peak growth of 439% in the 1970s. But this proved unsustainable and contracted by 58% in the 1980s. However rising global oil demand helped register growth of 91% in the 1990s. Diversification is a long-term issue for this over-exposed economy.

Macro-economic trend

This is a chart of trend of gross domestic product of Kuwait at market prices estimated by the International Monetary Fund with figures in millions of Kuwaiti Dinars.

Year

Gross Domestic Product

US Dollar Exchange

Inflation Index

(2000=100)

Per Capita Income

(as % of USA)

1980

7,764

0.27 Kuwaiti Dinars

55

171.08

1985

6,450

0.29 Kuwaiti Dinars

68

71.58

1990

5,328

0.29 Kuwaiti Dinars

80

37.00

1995

8,114

0.29 Kuwaiti Dinars

92

62.14

2000

11,570

0.30 Kuwaiti Dinars

100

48.92

2005

21,783

0.29 Kuwaiti Dinars

108

64.35

For purchasing power parity comparisons, the US Dollar is exchanged at 0.48 Kuwaiti Dinars only. Average wages in 2007 hover around $4,250 per month for Kuwaitis. As for skilled and experienced non-Kuwaiti (Engineers, Doctors, and Managers) the average monthly salary is hiked up tremendously, to an average of $10,000+ a month excluding living and other benefits. Please, also keep in mind that Kuwait is a tax free country so all the above figures reflect actual take home numbers.

Kuwait is a small country with massive oil reserves, whose economy has been traditionally dominated by the state and its oil industry. During the 1970s, Kuwait benefited from the dramatic rise in oil prices, which Kuwait actively promoted through its membership in the Organization of Petroleum Exporting Countries (OPEC). The economy suffered from the triple shock of a 1982 securities market crash, the mid-1980s drop in oil prices, and the 1990 Iraqi invasion and occupation. The Kuwaiti Government-in-exile depended upon its $100 billion in overseas investments during the Iraqi occupation in order to help pay for the reconstruction. Thus, by 1993, this balance was cut to less than half of its pre-invasion level. The wealth of Kuwait is based primarily on oil and capital reserves, and the Iraqi occupation severely damaged both.

In the closing hours of the Persian Gulf War in February 1991, the Iraqi occupation forces set ablaze or damaged 749 of Kuwait’s oil wells. All of these fires were extinguished within a year. Production has been restored, and refineries and facilities have been modernized. Oil exports surpassed their pre-invasion levels in 1993 with production levels only constrained by OPEC quotas.

Oil

Main article: Oil industry of Kuwait

In 1934, the ruler of Kuwait granted an oil concession to the Kuwait Oil Co. (KOC), jointly owned by the Anglo-Persian Oil Company (later British Petroleum Company) and Gulf Oil Corp. In 1976, the Kuwaiti Government nationalized KOC. The following year, Kuwait took over onshore production in the Divided Zone between Kuwait and Saudi Arabia. KOC produces jointly there with Texaco, Inc., which, by its 1984 purchase of Getty Oil Co., acquired the Saudi Arabian onshore concession in the Divided Zone.

In the Offshore Divided Zone, the Arabian Oil Co. 80% owned by Japanese interests and 10% each by the Kuwaiti and Saudi Governments has produced on behalf of both countries since 1961. The original concession agreements will expire in January 2003; negotiations to replace the concession with a technical service agreement should be completed in 2002.

The Kuwait Petroleum Corporation. (KPC), an integrated international oil company, is the parent company of the government’s operations in the petroleum sector, and includes Kuwait Oil Company, which produced oil and gas; Kuwait National Petroleum Co., refining and domestic sales; Petrochemical Industries Co., producing ammonia and urea; Kuwait Foreign Petroleum Exploration Co., with several concessions in developing countries; Kuwait Oil Tanker Co.; and Santa Fe International Corp. The latter, purchased outright in 1982, gives KPC a worldwide presence in the petroleum industry.

KPC also has purchased from Gulf Oil Co. refineries and associated service stations in the Benelux nations and Scandinavia, as well as storage facilities and a network of service stations in Italy. In 1987, KPC bought a 19% share in British Petroleum, which was later reduced to 10%. KPC markets its products in Europe under the brand Q8 and is interested in the markets of the United States and Japan.

Kuwait has about 94 billion barrels (15 km) of recoverable oil reserves. Estimated capacity, before the war, was about 2.4 million barrels (380,000 m) per day. During the Iraqi occupation, Kuwait’s oil-producing capacity was reduced to practically nothing. However, tremendous recovery and improvements have been made. Oil production was 1.5 million barrels (240,000 m) per day by the end of 1992, and pre-war capacity was restored in 1993. Kuwait’s production capacity is estimated to be 2.5 million barrels (400,000 m) per day. Kuwait plans to increase its capacity to 3.5 million (560,000 m) barrels per day by 2005.

v  d  e

Organization of the Petroleum Exporting Countries (OPEC)

Algeria  Angola  Ecuador  Iran  Iraq  Kuwait  Libya  Nigeria  Qatar  Saudi Arabia  United Arab Emirates  Venezuela

Social benefits

Kuwait has a fairly open economy with a lot of multi-national companies operating in the oil-rich nation. Shown here is a Burger King restaurant situated at the Kuwait International Airport.

Diversification

In 2007, hydrocarbon industries accounted for well over 95% of the Kuwaiti economy. Diversification of the economy into manufacturing industries remain a long-term issue.

Industry in Kuwait consists of several large export-oriented petrochemical units, oil refineries, and a range of small manufacturers. It also includes large water desalinization, ammonia, desulfurization, fertilizer, brick, block, and cement plants. During the invasion, the Iraqis looted nearly all movable items of worth, especially high-technology items and small machinery. Much of this has been replaced with newer equipment.

Agriculture

Agriculture is limited by the lack of water and arable land. The government has experimented in growing food through hydroponics and carefully managed farms. However, most of the soil which was suitable for farming in south central Kuwait was destroyed when Iraqi troops set fire to oil wells in the area and created vast “oil lakes”. Fish and shrimp are plentiful in territorial waters, and largescale commercial fishing has been undertaken locally and in the Indian Ocean.

Shipping

The Kuwait Oil Tankers Co. has 35 crude oil and refined product carriers and is the largest tanker company in an OPEC country. Kuwait also is a member of the United Arab Shipping Company.

External trade and finance

Kuwaiti exports in 2006

The Kuwaiti dinar is a strong currency pegged to a basket of currencies in which the U.S. dollar has the most weight. Kuwait ordinarily runs a balance-of-payments surplus.

Government revenues are dependent on oil revenues. Kuwait’s fiscal surplus in 2000 was some 15% of GDP, while it reversed to a deficit of more that 2% of GDP in 2001 on sliding oil prices.

The government’s two reserve funds: the Fund for Future Generations and the General Reserve Fund, which totalled nearly $100 billion prior to the invasion in 1990, were the primary source of capital for the Kuwaiti Government during the war. While these funds were depleted to $40-$50 billion after the war, they currently are estimated around $208 billion. The bulk of this reserve is invested in the United States, Germany, the United Kingdom, France, Japan, and Southeast Asia. In order of importance, foreign assets are believed to be invested in stocks and bonds, fixed yield instruments (mostly short term), and real estate. Kuwait follows a generally conservative investment policy.

Kuwait has been a major source of foreign economic assistance to other states through the Kuwait Fund for Arab Economic Development, an autonomous state institution created in 1961 on the pattern of Western and international development agencies. In 1974, the fund’s lending mandate was expanded to include all not just Arab developing countries.

Over the years aid was provided to Egypt, Syria, and Jordan, as well as the Palestine Liberation Organization. During the Iran-Iraq war, significant Kuwaiti aid was given to the Iraqis. The Kuwait Fund issued loans and technical assistance grants totaling over $520 million during its fiscal year ending 30 June 2000.

The stock market capitalisation of listed companies in Kuwait was valued at $130,080 million in 2005 by the World Bank.

Other statistics

Investment (gross fixed): 6.6% of GDP (2005 est.)

Household income or consumption by percentage share:

lowest 10%: NA

highest 10%: NA

Agriculture – products: practically no crops; fish

Industrial production growth rate: -5% (2002 est.)

Electricity:

production: 38.19 billion kWh (2003)

consumption: 35.52 billion kWh (2003)

exports: 0 kWh (2002)

imports: 0 kWh (2002)

Electricity – production by source:

fossil fuel: 100%

hydro: 0%

other: 0% (2001)

nuclear: 0%

Oil:

production: 2.418 million bbl/day (2005 est.)

consumption: 400,000 bbl/day (2006 est.)

exports: 2.57 million barrel/day (2008)

imports: NA

proved reserves: 105.0 billion barrel (2005 est.), including the divided zone.

Natural gas:

production: 8.3 billion cu m (2003 est.)

consumption: 8.3 billion cu m (2003 est.)

exports: 0 m (2002 est.)

imports: 0 m (2002 est.)

proved reserves: 1.572 trillion cu m (2005)

Current account balance: $31.51 billion (2005 est.)

Exports – commodities: oil and refined products, fertilizers

Imports – commodities: food, construction materials, vehicles and parts, clothing

Reserves of foreign exchange & gold: $9.296 billion (2005 est.)

Exchange rates: Kuwaiti dinars per US dollar – 0.3014 (2004), 0.298 (2003), 0.3039 (2002), 0.3067 (2001), 0.3068 (2000)

See also

Kuwait Fund for Arab Economic Development

Kuwait Investment Authority

References

^ GDP: GDP per capita, current US dollars

^ Select Country or Country Groups

External links

Kuwait Investment Authority

Kuwait Investment Office

Kuwait Economic Development at the Open Directory Project

Tax Articles, Kuwait Economy Review

Tax Articles, “The Tax System and Accounting Principles in Kuwait At a Glance”

Deletionpedia, Companies of Kuwait

v  d  e

Kuwait

Subdivisions

Terminology

Coat of arms

History

Timeline  History of Kuwait

Law

Courts  Nationality  Legislation

Politics

Government  Legislature  Emir  Prime Minister  Departments  Constitution  Elections  Parties  Foreign relations

Geography

Geology  Mountains  Lakes  Rivers

Economy

History  Kuwait Stock Exchange  Kuwaiti dinar  Banks (Central Bank of Kuwait)  Taxation  Transport  Communications  Energy

Military

History  Navy  National Police  Coast Guard  Military  Kuwait Air Force  Weapons of mass destruction

Demography

Demographics  Languages  Religion  Cities  Towns

Culture

Art  Cinema  Cuisine  Education  Literature  Media  Music  Sport  Television  Public holidays

Portal  Topics

v  d  e

Organization of the Petroleum Exporting Countries (OPEC)

Algeria  Angola  Ecuador  Iran  Iraq  Kuwait  Libya  Nigeria  Qatar  Saudi Arabia  United Arab Emirates  Venezuela

v  d  e

Members of the World Trade Organization (WTO)

Albania  Angola  Antigua and Barbuda  Argentina  Armenia  Australia  Bahrain  Bangladesh  Barbados  Belize  Benin  Bolivia  Botswana  Brazil  Brunei  Burkina Faso  Burma  Burundi  Cambodia  Cameroon  Canada  Cape Verde  Central African Republic  Chad  Chile  PR China  Colombia  Democratic Republic of the Congo  Republic of the Congo  Costa Rica  Cte d’Ivoire  Croatia  Cuba  Djibouti  Dominica  Dominican Republic  Ecuador  Egypt  El Salvador  European Union  Fiji  Gabon  The Gambia  Georgia  Ghana  Grenada  Guatemala  Guinea  Guinea-Bissau  Guyana  Haiti  Honduras  Hong Kong  Iceland  India  Indonesia  Israel  Jamaica  Japan  Jordan  Kenya  South Korea  Kuwait  Kyrgyzstan  Lesotho  Liechtenstein  Macau  Macedonia  Madagascar  Malawi  Malaysia  Maldives  Mali  Mauritania  Mauritius  Mexico  Moldova  Mongolia  Morocco  Mozambique  Namibia  Nepal  New Zealand  Nicaragua  Niger  Nigeria  Norway  Oman  Pakistan  Panama  Papua New Guinea  Paraguay  Peru  Philippines  Qatar  Rwanda  St. Kitts and Nevis  St. Lucia  St. Vincent and the Grenadines  Saudi Arabia  Senegal  Sierra Leone  Singapore  Solomon Islands  South Africa  Sri Lanka  Suriname  Swaziland  Switzerland  Separate Customs Territory of Taiwan, Penghu, Kinmen, and Matsu  Tanzania  Thailand  Togo  Tonga  Trinidad and Tobago  Tunisia  Turkey  Uganda  Ukraine  United Arab Emirates  United States  Uruguay  Venezuela  Vietnam  Zambia  Zimbabwe

All twenty-seven member states of the European Union are also members of the WTO in their own right: Austria  Belgium  Bulgaria  Cyprus  Czech Republic  Denmark  Estonia  Finland  France  Germany  Greece  Hungary  Ireland  Italy  Latvia  Lithuania  Luxembourg  Malta  Netherlands and Netherlands Antilles  Poland  Portugal  Romania  Slovakia  Slovenia  Spain  Sweden  United Kingdom.

Special administrative region of the People’s Republic of China.

Designated name for the Republic of China (commonly known as Taiwan)

v  d  e

Economy of Asia

Sovereign

states

Afghanistan  Armenia1  Azerbaijan1  Bahrain  Bangladesh  Bhutan  Brunei  Burma2  Cambodia  People’s Republic of China  Cyprus1  East Timor3  Egypt4  Georgia4  India  Indonesia  Iran  Iraq  Israel  Japan  Jordan  Kazakhstan4  North Korea  South Korea  Kuwait  Kyrgyzstan  Laos  Lebanon  Malaysia  Maldives  Mongolia  Nepal  Oman  Pakistan  Philippines  Qatar  Russia4  Saudi Arabia  Singapore  Sri Lanka  Syria  Tajikistan  Republic of China5  Thailand  Turkey4  Turkmenistan  United Arab Emirates  Uzbekistan  Vietnam  Yemen

States with limited

recognition

Abkhazia1  Nagorno-Karabakh  Northern Cyprus  Palestine  South Ossetia1 

Dependencies,

autonomies,

other territories

Aceh  Adjara1  Akrotiri and Dhekelia  Altai  British Indian Ocean Territory  Buryatia  Christmas Island  Cocos (Keeling) Islands  Guangxi  Hong Kong  Inner Mongolia  Iraqi Kurdistan  Khakassia  Macau  Nakhchivan  Ningxia  Papua  Sakha Republic  Tibet  Tuva  West Papua  Xinjiang 

1 Sometimes included in Europe, depending on the border definitions.  2 Officially known as Myanmar.  3 Sometimes included in Oceania, and also known as Timor-Leste.  4 Transcontinental country.  5 Commonly known as Taiwan. 

Categories: Economy of Kuwait | World Trade Organization member economies | Economy of the Arab League | OPEC
About the Author

I am an expert from China Manufacturers, usually analyzes all kind of industries situation, such as stethoscope parts , pediatric stethoscope.

Africa 2010 – The Future of Zimbabwe