Kuwait: 2024 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Kuwait

The 2024 Article IV Consultation with Kuwait discusses that the economy is projected to remain in recession under the baseline in 2024, then to recover over the medium term. The economy remains in recession, but a recovery has begun in the non-oil sector, and inflation is moderating. Lower oil prices and production have weakened the external and fiscal balances, while financial stability has been maintained. The risks around the outlook are skewed to the downside, but substantial financial buffers are a source of resilience to external shocks. Fiscal consolidation of about 13 percent of gross domestic product (GDP) should be implemented at a pace of 1 to 2 percent of GDP per year to reinforce intergenerational equity. The exchange rate peg remains an appropriate nominal anchor for monetary policy. Systemic financial risks remain contained and prudently managed. Continued efforts are needed to strengthen monetary policy transmission, maintain financial stability, and enhance financial intermediation. The authorities aim to implement reforms to support the transition to a dynamic and diversified economy. A comprehensive and well-sequenced structural reform package is needed to improve the business environment by raising efficiency, enhancing transparency, and further opening up the economy.