Kuwait economy to ‘rebound in 2 years’
World Bank expects Kuwait’s GDP to grow by 3%
The World Bank’s (WB) Country Manager in Kuwait Firas Raad said the late 2016 OPEC and major oil producers’ agreement, aimed to cut the glut in the global oil production, have added strains on the Kuwaiti economy in 2017. However, he expected Kuwait’s GDP to grow by three percent in the coming two years thanks to the efforts of the Ministry of Commerce and Industry to improve the business atmosphere and encourage the public-private partnership.
The competent agencies are working on investor guidelines, which will be issued soon, on the promising projects in the framework of the public-private partnership, Raad, a Jordanian national, said in statements to KUNA. The launching last week of Kuwait Business Center is a great achievement that testifies to the dedication of the sponsors of the Center, including the Ministry, Kuwait Direct Promotion Authority (KDIPA) and the parliamentary committee on the improvement of the business atmosphere, Raad noted.
Business atmosphere
The Center materializes the interagency cooperation to cut the red tape and facilitate the licensing of businesses, thus sparing much time, money and effort for local and foreign investors, he pointed out. The improvement of business atmosphere is closely related to economic growth and in consistency with the Amiri vision and the government development plans for diversifying the sources of national income and reducing dependence on oil revenues.
In addition, these efforts will help create more jobs for the citizens, increase the per capita income and encourage innovation and creativity, he went on. The efforts to improve business atmosphere, according to the World Bank observations, should include facilitating the issuance of construction licenses and provision of electricity for businesses, Raad said, commending the efforts of Kuwait Municipality in this regard.
Regarding the economic laws, recommended by the World Bank Group, he said the Kuwaiti government is working on a package of draft bills that include regulations for restructuring the insolvent companies, a bill voluntary restructuring, a bill on crediting information, and another one on secure transactions. The blueprint of the insolvency bill is being revised by the Ministry of Commerce and Industry as a prelude to tabling it to the cabinet for endorsement, he said, voicing hope that the law will give a quantum leap to the business atmosphere.
Trans-border trade
The World Bank Group and the Kuwaiti government are working together to enhance the trans-border trade and facilitate the registration of real property. A recent survey shows that the insufficiency of investment land constitutes the main obstacle facing the industrial and commercial development in Kuwait in general, Raad said. The oil-rich Gulf economies were hard hit by the sharp decline of the oil prices between 2014 and 2015, which necessitated radical financial and economic reforms, including austerity measures and lending to bridge their budget deficits, he recalled.
Kuwait’s economic growth rate slowed slightly in 2015-2016 to range between two and three percent due to two reasons; first, the continued government spending on mega projects and measures adopted by the Ministry of Finance to cut current spending; Second, the continued activities in the non-oil sectors in this period as well as the OPEC deal to cut oil production in late 2016 that helped ratchet up the oil prices, he explained. The Kuwaiti economy faces the challenge of turning into tangible realty the Amiri vision and the government plans for economic reforms in order to revitalize the private sector and provide jobs for the coming generations, he underscored.
Coupled with slowed growth in the world’s major economies and global protectionist trade policies, geopolitical tensions in the Middle East and beyond also pose formidable challenges to Kuwait’s economic outlook in the coming three years, he cautioned. Regarding the World Bank programs for Kuwait, he said they consist of four axes; first, the private sector; second, the public sector; third, the improvement of infrastructure; and last but not least, the development of human resources.
The private sector
As for the private sector, there are programs for promoting the small enterprises, protecting competition, improving the business atmosphere, and boosting the private-public partnership. There are two programs relating to the revitalization of the private sector; these are the cooperation between the World Bank and the Ministry of Finance for better management of the public funds; and the mechanisms of land registration and state property, Raad went on. Regarding the infrastructure, he noted that the joint program with Kuwait Municipality for the management of waste was scrapped.
The human development program envisages the World Bank working with Kuwait’s educational, health and social security sectors to build the capacity of workers through quality education. Nearly 50 percent of the joint programs focus on improving the quality of curriculums of education and higher education, he said, commending the efforts being made in the framework of the national program for educational improvement. Raad extolled His Highness the Amir Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah to defuse the tensions in the region and alleviate the suffering of the Syrian refugees.