Kuwait is the most democratic state in the Gulf Cooperation Council and attracts a number of our clients. Thanks to the high standard of living enjoyed by Kuwaiti citizens as well as the strict controls on the large expatriate workforce, the risk of widespread social discontent is low. Oil wealth typically enables the state to run a fiscal surplus, although the large size of the public sector hampers the development of the non-oil private sector.

We keep our clients abreast of the latest market moves and political developments as part of our 'top-down' and 'bottom-up' perspective. Clients also benefit from in-depth analysis on 18 of Kuwait’s most important industries. We provide interactive data and forecasting alongside detailed and risk-assessed analysis from our expert research teams. We aim to keep you ahead of the curve, so you can do business with ease in Kuwait.

Kuwait Country Risk

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Core Views

  • We expect the Kuwait's economic growth to accelerate modestly over 2017 and 2018, forecasting real GDP growth of 2.7% and 2.5%, respectively, from 1.7% in 2016. After a long period of stagnation, the Kuwaiti investment outlook appears to be improving, while an uptick in oil output will support growth over the coming quarters. However, we again highlight Kuwait's ever-volatile political situation as the key downside risk to economic activity.

  • Kuwait has seen a flurry of populist legislation recently, including several measures specifically targeting expatriate workers. This runs the risk of increasing uncertainty within the private sector, as well as cementing perceptions of the country as a hub of policy instability.

  • We expect tensions to remain between the government and the legislative branch, even with the...

Kuwait Operational Risk Coverage (9)

Kuwait Operational Risk

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BMI View: Low levels of FDI flowing into Kuwait reflect poor economic openness and an unfavourable business environment for foreign investors. The Kuwaiti government still has a significant involvement in the economy, and privatisation has been very slow. Meanwhile, limited reforms have failed to yield vital improvements in foreign investment law, patent protection and public administration, which create fundamental stumbling blocks to business. We also expect to see increased subsidy cuts and indirect taxation as government revenues come under pressure due to the decline in global commodities prices, which will undermine Kuwait's primary investment incentive. In the short term, therefore, we do not expect to see FDI increase...

Kuwait Crime & Security

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BMI View: Overall, especially when compared regionally, Kuwait possesses a relatively secure operating environment for businesses and investors. The most prominent threat stems from Islamic State terrorist activity within Kuwait's borders; however, this threat is counteracted by Kuwait's strong counter terrorism capabilities. Kuwait generally has low levels of petty and violent crime; however, further threats stem from the country's limited financial and cyber crime combating capabilities. Therefore, Kuwait scores a fairly respectable 66.2 out of 100 for the Crime and Security Risk...

Kuwait Labour Market

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BMI View: Owing to structural weaknesses in the national education system and a net inflow of uneducated migrant workers from South Asia, we see fundamental risks that undermine labour market competitiveness and threaten investment performance in Kuwait. While migration acts to lower basic skill levels in the labour market, it is also the backbone of competitiveness, providing two-thirds of the workforce and helping to lower the cost of labour. Overall, Kuwait performs moderately well in our Labour Market Risk Index, with a score of 53.2 out of 100. This puts Kuwait in seventh place...

Kuwait Logistics

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BMI View: Driven by considerable oil reserves and the government's large financial buffers, Kuwait's economy will weather the storm of low oil prices better than most of its GCC neighbours. Resource wealth also enables firms to benefit from cheap electricity and fuel prices, though the Kuwaiti government has began cutting some subsidies and hiking prices. Although Kuwait's transport network is relatively efficient, particularly in the aviation sector, the absence of railways and a limited road network drive up transport costs, while a lengthy and cumbersome trade bureaucracy increases the risk of delays and uncompetitive lead times. Kuwait ranks 9th out of 1...

Kuwait Trade & Investment

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BMI View: Low levels of FDI flowing into Kuwait reflect poor economic openness and an unfavourable business environment for foreign investors. The Kuwaiti government still has a significant involvement in the economy, and privatisation has been very slow. Meanwhile, limited reforms have failed to yield vital improvements in foreign investment law, patent protection and public administration, which create fundamental stumbling blocks to business. We also expect to see increased subsidy cuts and indirect taxation as government revenues come under pressure due to the decline in global commodities prices, which will undermine Kuwait's primary investment incentive. In the short term, therefore, we do not expect to see FDI increase...

Kuwait Industry Coverage (18)

Kuwait Autos

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BMI View: Over the past quarter, we have become increasingly bearish on the short-term outlook for new vehicle sales. We now forecast a 30% fall in sales over 2016, although luxury brands will outperform.

Kuwait - Total Vehicle Sales
f = BMI forecast. Source: Central Statistical Bureau, BMI

Key Views

  • Most...

Kuwait Commercial Banking

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Commercial Banking Sector Indicators
Date Total assets Client loans Bond portfolio Other Liabilities and capital Capital Client deposits

Kuwait Consumer Electronics

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BMI View: Kuwait is a high value consumer electronics market in per capita terms, and there was strong growth fuelled by first-time sales of smartphones, tablets and flat-panel TV sets from the global financial crisis until 2014. The growth potential of the market is however much reduced by 2016 as a result of saturation in most device categories, as well as the threat of cannibalisation of distinct devices, such as tablets and digital cameras, by smartphones. Further, the lower oil price has a detrimental impact on the wider consumption outlook, and as such we forecast the market will expand at a CAGR of just 0.8% over 2016-2020.

Latest Updates And Industry Developments


Kuwait Defence & Security

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BMI View: Though Kuwait's state revenues are feeling the effects of low oil prices, we forecast defence expenditure in the country to return to growth in 2016 amid growing security threats from Islamist extremism and sectarian tensions, both internally and externally. In addition to the national defence budget, the Kuwaiti parliament has approved USD10bn in defence modernisation funding over the next decade, covering the procurement of products such as fighter jets, tanks and air defence systems. Due to the highly limited size and capability of Kuwait's defence manufacturing base, such equipment will need to be sourced from abroad. We expect this to remain the case throughout the next decade, as...

Kuwait Food & Drink

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BMI View: Kuwait benefits from a large and growing wealthy consumer base, which will maintain positive spending power despite economic pressures. Lower food inflation will further boost consumer spending, increasing the demand for high-value goods. The country's large Muslim population will support growth within the non-alcoholic beverage segment stemming from rising prospects for innovation and premiumisation. The MGR sector remains dominated by government-backed cooperative formats, though we expect rising need for convenience will encourage modern outlets expansion.

Food And Drink Spending

Kuwait Freight Transport

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BMI View: We expect positive growth across the Kuwaiti freight transport sector in 2016, as the country recovers from the nominal fall in trade in 2015 - which was driven by a fall in oil prices which didn't affect the non-oil freight transport sector overly in the first place. Although the outlook is slightly more precarious than in years gone by, high levels of reserves and a wealthy population means that spending on both capital goods - driving bulk and project volumes - and consumer goods should continue, supporting the freight transport sector.

Although our growth forecasts for volumes carried on Kuwait's different freight modes in 2016 and 2017 - namely Air and Road, the rail network is not yet operational - are not for spectacular growth, they are...

Kuwait Information Technology

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BMI View: We forecast a weak growth outlook for the Kuwait IT market, with a decline in oil prices and saturation of the retail market playing a key role in this. However, high incomes will ensure the market remains lucrative in per capita terms, despite a small population and limited growth prospects. Within the enterprise sector, we expect IT investments to benefit from the need to diversify the economy away from the oil sector.

Latest Updates And Developments

  • IT hardware sales in Kuwait will increase from KWD158mn in 2016 to KWD164mn in 2019, recording a compound annual growth rate (CAGR) of 1.3%.

  • Software will experience heightened growth compared to hardware, with sales of KWD59mn in 2016 increasing at a CAGR of 3.8% to reach KWD66mn in 2019.

  • Services will lead the sector...

Kuwait Infrastructure

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BMI View : Kuwait will post moderate, if unspectacular, construction sector growth in 2016 and 2017, as the government ramps up public expenditure for infrastructure projects in support of its economic diversification programme. Although streamlined Public Private Partnership (PPP) legislation has catalysed an uptick in PPP activity, Kuwait's opaque and cumbersome business environment as a whole remains unattractive to private investors, which will weigh on growth potential in the coming years.

Forecast and Latest Updates

  • We have raised our outlook for Kuwait's construction sector's growth...

Kuwait Insurance

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BMI View: We expect to see healthy growth in Kuwait's insurance market throughout the forecast period to 2019, though the market will remain small in both regional and global terms, with life insurance in particular reflecting low rates of penetration and density. Kuwait's insurance market is highly fragmented, and a lack of sufficient regulatory oversight continues to undermine the operating environment and deter potential investment. There is, however, substantial growth potential, including via the expanding takaful lines. The country is undertaking reform of the financial sector, including implementing the Basel III banking sector regulation and supervision framework, which...

Kuwait Medical Devices

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BMI View: Lower oil prices will have a detrimental effect on Kuwait's economy, weighing slightly on the government's expenditure plans but more notably on business confidence and consumer spending, which will have an impact on medical device consumption. High population growth, the increasing burden of non-communicable diseases, healthcare infrastructure developments and health insurance expansion will drive market growth.

Projected Medical Device Market, 2014-2019
Total (USDmn) Per Capita (USD) Total (Local Currency mn)...

Kuwait Oil & Gas

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BMI View: Kuwait has made progress on key oil and gas projects that have previously been stalled, namely a major investment push targeting the downstream sector, but we maintain the country will fall short of ambitious production targets for both oil and gas. In addition to political and regulatory risks, Kuwait's oil sector also faces structural challenges from a surplus in both OPEC and non-OPEC supplies, and this will further weigh on the long-term production outlook.

Headline Forecasts (Kuwait 2013-2019)
2013 2014

Kuwait Petrochemicals

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External markets are under pressure and margins are being squeezed by falling prices and rising feedstock costs. However, this will not stop the development of downstream plants, with the Al-Zour project at the greenfield 615,000 barrels per day (b/d) Al-Zour refinery now going ahead following delays, and with debottlenecking projects helping to expand capacity. However, the alleviation of sanctions on Iran will pose a major threat to all regional producers and could still drive Kuwaiti petrochemicals margins down further. There are also downside effects of a medium-term reduction in oil refinery capacity.

The slowdown in the Chinese petrochemicals market has exacerbated the problem of oversupply in the Asia Pacific region. Moreover, the Chinese market is moving towards a situation of self-sufficiency. This is likely to crowd out Kuwaiti exports from the market, requiring producers to seek other markets. The most obvious alternative market is...

Kuwait Pharmaceuticals & Healthcare

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BMI View: The gradual economic recovery will support the government's plans within the healthcare sector; however, political instability poses the greatest risk to our outlook. Kuwait's political backdrop is complicated by labour and population imbalances, as well as a parliament which has consistently blocked the government's reform efforts. While these healthcare reforms are still likely to be implemented, changes to the election law reform mean they are vulnerable to lengthy delays as political tensions continue to elevate.

Headline Expenditure Projections

  • Pharmaceuticals: From KWD300mn (USD1.0bn) in 2015 to KWD310mn (USD1.03bn) in 2016; +4.9% in local currency terms and +2.9% in US dollar terms. Forecast revised downward...

Kuwait Power

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BMI View : Kuwait will register limited power generation capacity growth over the next decade, with the exception of the Al-Zour gas power facility, as a poor track-record in executing big-ticket infrastructure projects coupled with a limited project pipeline will weigh on sector expansion plans. We note that ambitious government plans to develop a non-hydro renewables sector provide an upside risk to our forecast.

Headline Power Forecasts (Kuwait 2015-2021)
2015 2016f ...

Kuwait Real Estate

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BMI View: The real estate sector is currently witnessing marginally increasing rental rates due to continued demand and low levels of new developments. Therefore, supply is reducing in relation to demand and the vacancy rate coming down. There is sustained demand for modern units in all sectors, particularly the retail and industrial sectors bolstered by consumer demand from the young population. An overreliance upon the oil sector continues to threaten growth in the country, however, continued efforts to diversify the nation's fiscal interests look to mitigate this somewhat. Such efforts will also prove beneficial to the office and industrial sectors in terms of demand for premises and growth.

We expect...

Kuwait Retail

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BMI View: As a less diversified economy than some of its GCC peers, Kuwait will face greater challenges in achieving substantial growth in the environment of low commodity prices. Even though the economic trough seems to be a thing of the past, the growth in household spending will stay relatively slow in the market, which has traditionally benefited from its affluent residents. Nonetheless, a couple of large-scale mall openings in 2017-2018 could reshape the whole sector by expanding and diversifying its supply.

Key Views and Developments

  • Kuwait's government agreed to deregulate retail fuel market in August, which will lead to fuel price hikes of as much as 80%. While the new prices will remain much lower than in Europe, they will add an extra pressure for disposable incomes in the country.

  • The...

Kuwait Telecommunications

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New Data Services Key To Revenue Growth
Mobile Operators' Quarterly Revenues (USDmn), 2014-2015
Note: no Q215 data available yet for VIVA. Source: Operators

Key Data:

  • Monthly blended average revenue per user (ARPU) continued to decline in the face of intense competition, to KWD7.2 in Q215. Despite a boost from data services, ARPU's will decline to KWD7 by the end of 2015 and further to KWD6 by the end of our forecast.

  • Take-up of 3G/4G data connections has...

Kuwait Water

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BMI View: The water sector of Kuwait faces a daunting challenge. The country is one of the most arid on the planet and yet its water consumption levels per capita are among the highest in the world. With extremely limited natural resources the government has relied on desalination as its method of choice for providing households and industry with water. This process is expensive however and exploration into other processes has begun. Despite this interest in new technology and techniques, the environment for foreign investors looks unlikely to become particularly appealing. The country has a poor record for completing infrastructure projects and coupled with a somewhat unstable political landscape leading to frequent alleged cases of corruption, levels of foreign investment are forecast to decline.

Kuwait is susceptible to long periods of drought, as has been the case over recent months. This...

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