Kuwaiti state news agency KUNA reported that the country’s gross domestic product (GDP) shrunk 9.9% in 2020, compared to 0.4% growth in 2019. The drop is mainly because of a sharp decrease in oil prices and because of the economic repercussions of the COVID-19 pandemic, the report added.
Kuwait, which derived half of its revenues from oil selling, has to face economic difficulties caused by record-low oil prices and the effects of COVID-19 on the economy. To cope with these economic challenges, the tiny Gulf country is preparing a law that would let it seek international debt. However, the negotiations reached an impasse due to disagreement between successive parliaments and cabinets.
Last April, in a published report issued by the International Monetary Fund regarding the economic outlook of the Gulf country in 2020, it was estimated that Kuwait’s GDP contracted 8%. However, KUNA’s report shows that the economic outlook of Kuwait in 2020 was worse than the IMF had predicted.
Quoting from the governor of Kuwait’s Central Bank, Mohammad Al Hashel, the report indicated that the institution deployed all the necessary tools to reduce the pandemic’s economic impacts.
According to the Central Bank’s governor, preliminary estimates and statistics also exhibited that the headline inflation rate rose to about 2.1% in 2020 from 1.1% in 2019.
The report also showed that Kuwait’s population, which the vast majority of are expatriate workers and their families, also declined by 2.2% in 2020, following the 3.3% growth in 2019.
In April, it was reported that Kuwait and its state-run petroleum firm, Kuwait Petroleum Corporation, had reached an agreement foreseeing that the company would provide a huge amount of money to the government to help it in covering the deficit.