Kuwait banks on redevelopment strategy
Much of this is centred around developing five islands into free zones and tourist havens
Kuwait’s economy continues to make gains, reflecting in part the increased investments in infrastructure and enhanced confidence among private sector investors. An example of this is the assumption of an inflationadjusted GDP growth of 2.3 per cent in 2018 and then ticking up to 4.1 per cent next year.
But the acceleration leaves an impact on inflation, which could reach 3 per cent in 2019 and twice as much as in 2017. However, 3 per cent inflation is normal by global levels but anything beyond that poses a risk.
Kuwaiti authorities are aiming high via numerous megaprojects, most notably the development of several islands into commercial entities as part of efforts to diversify the economy. Of all the Gulf countries, Kuwait is the most dependent on oil, which accounts for 88 per cent of treasury revenues and 85 per cent of export earnings, as well as 40 per cent of GDP.
Yet, implementation of Kuwait’s 2035 plan could reduce its relative importance. The strategy involves development of five islands — Boubyan, Warbah, Failaka, Maskan and Oaha — into economic zones with an investment value of up to $160 billion. They would also double up as tourist and recreational areas, in turn requiring investments in commercial and residential complexes as well as infrastructure. If all goes according to plan, the national redevelopment strategy would transform the country into a new Hong Kong. Not surprisingly, China is being enticed to commit investments into the islands.
Turning to other areas, work is in progress for the development of building No. 2 at Kuwait International Airport. A Turkish company has a $4.2 billion contract to carry out the project.
Kuwait feels the urge to develop an aviation industry for itself, as it represents an economic advantage for GCC economies. This is the case in the UAE via Dubai International Airport and Emirates airline.
It is hoped these measures would boost prospects for the Kuwaiti economy, which lags other GCC countries in many comparative indexes.