IMF sees economic recovery in Kuwait, projects GDP growth of 2.6% in 2025
Kuwait resumes sovereign debt issuance as IMF reviews economic outlook; inflation eases, budget deficit improves despite lower oil revenues
The Central Bank of Kuwait (CBK) has issued a statement marking the conclusion of the official visit of the International Monetary Fund (IMF) mission to Kuwait, held from December 3 to 17, 2025, as part of the IMF’s 2025 Article IV Consultations. The statement outlined the mission’s key findings on Kuwait’s economic performance and outlook.
According to the IMF, Kuwait’s economy has begun to recover in 2025, with real GDP growth projected at 2.6% this year, accelerating to 3.8% in 2026, before stabilizing above 0.2% over the medium term (three to five years). Growth in the non-oil sector is expected to reach 2.7% in 2025 and 3.0% in 2026, stabilizing at around 2.7% in the medium term.
On price developments, the IMF noted a continued decline in Kuwait’s core inflation, which fell to about 2.4% year-on-year in August 2025. Average inflation is projected to ease further to around 2.3% in 2025 and 2.1% in 2026, before stabilizing near 2.0% over the medium term, reports Al-Anba daily.
Regarding the balance of payments, the IMF reported that Kuwait’s current account continued to record strong surpluses, supported by robust foreign reserves in 2024. The current account surplus reached approximately 29.1% of GDP in 2024, but is expected to moderate to around 22.9% in 2025 and 19.1% in 2026, reflecting lower global oil prices.
On public finances, IMF experts observed an improvement in budget performance despite weaker oil revenues. The budget deficit narrowed to about 2.2% of GDP in fiscal year 2024/2025, driven by measures including wage bill rationalization, reduced energy subsidies in line with global fuel prices, and higher non-oil revenues from increased government service fees.
However, the deficit is projected to widen to around 0.87% of GDP (about 4.2 billion dinars) in fiscal year 2025/2026, and to approximately 9.4% of GDP (around 4.6 billion dinars) in 2026/2027, due to higher public spending and lower oil revenues. The deficit is expected to increase further to about 11.5% of GDP (roughly 7.0 billion dinars) by fiscal year 2031/2032.
In this context, the IMF noted that the government has resumed issuing sovereign debt after nearly a decade, with local bond issuances equivalent to about 4.6% of GDP and external bonds amounting to around 7.1% of GDP issued up to the end of October 2025.
