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Kuwait aims for 6% economic growth, second-highest in Gulf by 2026

The country is implementing measures to facilitate essential financial and structural reforms, ultimately aiming to achieve stronger GDP growth in the medium term.

• Kuwait’s economy is anticipated to grow by 2.8% in 2025, following an expected contraction of up to 1.5% in the current year.

• The economies of the Gulf region will achieve higher growth rates over the next two years, driven by increased oil and gas production, while non-oil sectors continue to grow strongly, according to a forecast by Capital Economics.

• The UAE is expected to maintain its position as the fastest-growing economy in the Gulf region during the current and next two years.

According to a forecast by Capital Economics, Kuwait is expected to achieve the second-highest economic growth rate in the Gulf in 2026, reaching up to 6%. Qatar is projected to lead with a growth rate of 11.5% in the same year.

The Al-Anba newspaper reported that Kuwait’s economy is anticipated to grow by 2.8% in 2025, following an expected contraction of up to 1.5% in the current year.

According to a report published by “Economy of the East,” Kuwait has greater potential to sustain an expansionary fiscal policy. The report highlights measures that pave the way for necessary financial and structural reforms, ultimately aiming for stronger GDP growth in the medium term. It also notes that the economy’s contraction is expected to slow to 1.5% this year and then rebound to 6% in 2026.

It is estimated that the economies of the Gulf region will achieve higher growth rates over the next two years, driven by increased oil and gas production, while non-oil sectors continue to grow strongly, according to Capital Economics.

A recent report indicates that the UAE is expected to maintain its position as the fastest-growing economy in the Gulf region during the current and next two years. Qatar, benefiting from the commencement of gas production from the North Field, is projected to become one of the fastest-growing economies globally by 2026.

The report noted that OPEC+’s decision to maintain low oil production until October will delay the GDP growth recovery in the region’s countries beyond initial expectations.

On June 2, the alliance agreed to extend the additional voluntary production cuts of 2.2 million barrels per day (bpd), which were announced in November 2023, until the end of September 2024. Thereafter, these reductions will gradually be phased out on a monthly basis until the end of September 2025.

From 2026, it is estimated that Gulf States will increase their oil production more rapidly, and the cycle of monetary easing is expected to begin soon, as Gulf states follow the path of the Federal Reserve, which is anticipated to start cutting interest rates by September, according to Capital Economics.

However, future projections for the Gulf region face challenges starting in 2025, with Brent crude prices expected to decline to $75 a barrel next year, compared to about $83 a barrel this year, as per the report.

Lower crude prices could make it challenging to sustain expansionary fiscal policies, potentially leading to a vicious cycle where governments may need to increase borrowing to bridge the revenue-expenditure gap, thereby raising the debt burden or necessitating the postponement of some planned projects.





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