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  • 07-06-23

    Kuwait under economic threats due to external factors

    (MENAFN) According to the International Monetary Fund's report, Kuwait's economy faces risks stemming from the instability of oil prices and production caused by external factors. These risks have the potential to impact the country's external balance, public finances, economic growth, and inflation. The volatility in oil prices and production poses a challenge to Kuwait's economic stability, highlighting the need for diversification and resilience in the face of changing global dynamics.

    Furthermore, Kuwait's economy could also be susceptible to the global economic slowdown, especially if there is a further tightening of monetary policies or pressures in the banking sectors of major advanced economies. The interconnectedness of the global economy means that adverse developments in other countries can have repercussions for Kuwait, underscoring the importance of closely monitoring international economic trends.

    The report emphasizes the significance of implementing necessary financial and structural reforms to mitigate these risks. Failure to promptly address these challenges could result in the continuation of current public fiscal policies, potentially damaging investor trust and hindering progress in diversifying economic activities and enhancing competitiveness. The dominance of oil in Kuwait's economy and the global decarbonization trends necessitate fiscal reforms to ensure sustainability and structural reforms to foster non-oil private sector-led growth.

    However, the report also acknowledges the existing political gridlock between the government and parliament, which has hindered progress in implementing essential reforms. Overcoming this gridlock and advancing reforms from a position of strength can unlock new opportunities for Kuwait's economic development. By embracing comprehensive fiscal reforms and pursuing structural changes, Kuwait can strengthen its resilience, reduce its dependence on oil, and foster a more diversified and competitive economy.

    Addressing these risks and seizing the potential opportunities will require concerted efforts from both the government and other stakeholders in Kuwait. By embracing reform measures, Kuwait can enhance its economic stability, ensure sustainable growth, and navigate the evolving global economic landscape.

    MENAFN07062023000045014228ID1106404730

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