Kuwait experiences a major economic shift in 2024 through global partnerships

• In 2024, Kuwait’s economy saw significant changes, with global and regional geopolitical tensions disrupting supply chains still recovering from COVID-19, causing a 30% surge in shipping costs, rising goods prices, and increased inflation.

• Kuwait recorded a 150.39 million dinar surplus in the first half of 2024-2025, rebounding from a 1.45 billion dinar deficit in the same period last year, driven by higher revenues and reduced expenses.

• In July, Kuwait Oil Company announced a significant discovery of light oil and gas in the Al-Nokhatha offshore field, east of Failaka Island, covering an estimated 96 square kilometers.

• In 2024, Kuwait Finance House merged with Al-Ahli United, creating the largest banking entity by market capitalization at 12.3 billion dinars, signaling a growing trend of local mergers.

In 2024, the Kuwaiti economy saw significant changes across most sectors, while ongoing geopolitical tensions both regionally and globally posed a serious threat to supply chains already struggling since the COVID-19 crisis. As a result, shipping costs surged by around 30%, driving up the prices of goods and contributing to rising inflation locally and globally, according to Al Rai newspaper.

Despite the similarity in performance across some sectors in 2024 compared to 2023, including the pace of major development projects, this year brought significant economic events, procedural changes, bills, decisions, and agreements with countries, advanced by China, in preparation for transformative global partnerships. These developments suggest a potential major economic shift for Kuwait.

In 2025, factors will reset the local landscape for investment, stability, and support. Al Rai newspaper reviews the most prominent economic events of 2024 and their accompanying indicators.

Kuwait maintained its credit rating from international agencies

In 2024, Kuwait maintained its credit rating from international agencies. Fitch confirmed its rating at (AA-) with a stable outlook, Moody’s affirmed its rating at (A1) with a stable future outlook, and Standard & Poor’s confirmed its (A+) rating with a stable outlook.

The agencies noted that the stability of Kuwait’s rating is supported by government financial assets estimated at 418% of GDP in 2024, along with the continued strength of the general budget and liquidity margins, positioning Kuwait’s economy well in the foreseeable future, while maintaining macroeconomic and external stability.

Budget surplus

After a year and a half of deficits, specifically since the 2022-2023 budget, which amounted to 6.368 billion dinars, the budget recorded a surplus of 150.39 million dinars in the first half of 2024-2025, compared to a 1.45 billion dinar deficit for the corresponding period of the previous fiscal year. This surplus was supported by an increase in revenues and a decrease in expenses.

According to data from the Ministry of Finance, the main reason for the surplus in the financial period from April to the end of September was a 15.66% increase in revenues, rising to 10.12 billion dinars, compared to 8.75 billion dinars. The collected revenues represented 53.6% of the estimated target for 2025/2024, which is 18.92 billion dinars, with oil revenues accounting for 8.88 billion dinars.

Integration of similar entities, bodies, and institutions

The government initiated a study in recent months on integrating similar entities, bodies, and institutions. In November, Deputy Prime Minister, State Minister for Cabinet Affairs, and Acting Chairman of the Civil Service Commission Shareeda Al-Maosherji, announced the assignment of the Civil Service Bureau to complete the necessary studies aimed at improving performance in government agencies.

The study will set standards for integrating sectors within some government entities to raise efficiency, rationalize expenses, increase administrative discipline, accelerate processes, and prevent conflicts of competencies. The government is awaiting the proposals prepared by the relevant authorities in this regard.

Discovery of substantial commercial quantities of light oil and associated gas

In July, the Kuwait Oil Company announced the discovery of substantial commercial quantities of light oil and associated gas in the Al-Nokhatha offshore field, located east of Failaka Island in Kuwaiti economic waters. The initial estimated area of the field is approximately 96 square kilometers.

The company reported that the daily production from the Nokha-1 well in the Manaqish geological layer reaches about 2,800 barrels of light oil and seven million cubic meters of associated gas. Preliminary estimates of the field’s hydrocarbon resources are approximately 2.1 billion barrels of light oil and 5.1 trillion standard cubic feet of gas, equivalent to 3.2 billion barrels of oil equivalent.

At the same time, Kuwait adhered to the production quotas set by the OPEC Plus alliance in 2024, with average oil production reaching 2.55 million barrels per day, compared to 2.7 million in 2023.

Oil prices ranged between 75 and 80 dollars per barrel, leading to an 8% decline in oil revenues. However, Kuwait made significant progress in liquefied gas exports, which rose by 20% compared to the previous year. The oil and gas sector remains the backbone of the Kuwaiti economy.

Taxes and laws

• The Council of Ministers approved a draft decree-law to introduce a tax on multinational entities, imposing a 15% tax on entities operating in more than one country or jurisdiction. The law will take effect in Kuwait on January 1, 2025.
• The Ministry of Finance submitted to the Fatwa and Legislation Department a draft law governing investment in state property, with a completely revised wording compared to Law “105” of 1980. This includes the addition of key contractual clauses, most notably the prohibition of exchanging state property with third parties.
• State property will be leased through public or limited bidding for up to 30 years, with the Minister of Finance authorized to extend contracts to 50 years and renew them for additional periods. The contract can be terminated for public interest or other reasons.
• A government recommendation has been made to reintroduce public chalet projects built on state properties with expired contracts, using the best methods available.

Al-Zour North Power Plant project

The Public-Private Partnership Projects Authority is close to moving the Al-Zour North Power Plant project (for electricity production and desalination) into the implementation phase, especially with the closing date for tenders from eligible companies on December 30.

The second and third phases of the project will have a production capacity of 2,700 megawatts of electricity and 120 million imperial gallons of water per day. Five alliances have been qualified for its implementation.

Mergers in Kuwait’s banking sector

2024 saw the first merger of its kind in the Kuwaiti banking sector between Kuwait Finance House and Al-Ahli United, resulting in the largest banking entity by market capitalization, valued at about 12.3 billion dinars. This indicates a growing appetite for local mergers in 2024.

Merger talks are ongoing between Boubyan Bank and Gulf Bank after the latter’s conversion to Islamic banking. Additionally, Burgan Bank received regulatory approval to acquire United Gulf Bank in Bahrain, strengthening its regional presence.

2024 also saw the first change in global monetary tightening since March 2022, with the Central Bank of Kuwait reducing the discount rate by 25 basis points to 4% on September 19.

Kuwaiti banks maintained strong capital and liquidity positions, with continued credit slowdown, although at a slower pace compared to 2023. They also maintained low levels of non-performing loans, supported by good provisions.

Kuwaiti Islamic banks showed strong performance, with facility balances rising 6.65% to 57.11 billion dinars by the end of November. Personal facility balances increased 2.7%, rising by about 511.7 million dinars to reach 19.273 billion dinars.

The banking sector’s assets rose by 4.3%, an increase of about 3.766 billion dinars, totaling 9.14 billion dinars in November. Traditional banks saw asset growth of 1.83%, equivalent to 809.6 million dinars, reaching 44.9 billion dinars, while Islamic banks saw a 6.8% increase, rising by 2.957 billion dinars to 46.5 billion dinars.

Rise in the index of the Kuwaiti projects market

Meed magazine reported a 7.9% increase in the index of the Kuwaiti projects market, reaching $194 billion, ranking fifth in the Gulf and seventh in the Gulf, Iran, and Iraq. The total value of active oil projects in Kuwait more than doubled in the first seven months of 2024.

The magazine noted that the total value of active oil projects—whether in the pre-implementation stages or under implementation—rose from $7 billion at the beginning of the year to over $14.9 billion by the end of July.

It also predicted a rise in the awarding of infrastructure and construction projects in Kuwait for the second consecutive year, following strong performance in the first half of 2024, which boosted the value of awarded construction contracts to over $2.1 billion, more than double the value of contracts awarded in the first half of 2023, which totaled around $1 billion.

Kuwait records 36.9 billion dinars GDP

The gross domestic product (GDP) recorded 36.9 billion dinars during the nine-month period (January–September) 2024. The added value of the non-oil sector in Kuwait’s GDP for the first three quarters of 2024 was approximately 20.5 billion dinars, while the added value of the oil sector amounted to about 16.3 billion dinars.

Annual inflation in Kuwait

Data from the Central Bureau of Statistics revealed that annual inflation in Kuwait rose by 2.36% in November, with a 0.15% monthly increase due to higher prices in several major groups affecting the price index.

Strategic partnership with Google Cloud

2024 saw further activation of the strategic partnership between Kuwait and Google Cloud, with efforts to promote digital transformation in the country. This initiative is expected to lead to additional partnerships with other international companies.

Kuwait ranked sixth in the Gulf in the UN’s e-Government Development Index

Kuwait ranked 66th globally, sixth in the Gulf, and 20th in Asia in the United Nations e-Government Development Index (EGDI) and its sub-indicators. Kuwait was categorized in the “very high” group, according to data from the 2024 version of the EGDI, published by the United Nations Department of Economic and Social Affairs. Additionally, Kuwait ranked in the “very high” category on the “Telecommunications Infrastructure Index” based on the levels of the “Internet Services Index.”

Kuwait’s real estate landscape

• 96.6 thousand existing housing requests.
• A 3.3% decline in private housing prices in the third quarter, with an overall decline recorded for 2024.
• A 11.9% increase in real estate trading from the beginning of 2024 through November, reaching 3.24 billion dinars, compared to 2.9 billion dinars in the same period of 2023.
• Launch of the electronic real estate broker system project to include all real estate sectors, expanding from the previously residential-only scope, with work on paper books set to be completed by January 1, 2025.
• Permitting the combination of ‘real estate brokerage’and ‘real estate valuation.’
• Introduction of new regulatory controls for real estate marketing both within and outside Kuwait.
• Kuwait was impacted by the tragedy of the ‘Al-Mangaf’ fire, prompting the reorganization of the warehouse sector with strict regulations. This resulted in a significant increase in rent prices for ‘single buildings’ and labor housing, with warehouse rental prices more than doubling.
• Issuance of the executive regulation of Law (125) of 2023, which abolished non-isolable real estate agencies and authorized the issuance of certificates of construction descriptions, along with books of survey and identification for properties violating real estate agency regulations from the Municipality of Kuwait.

Stock exchange performance

The Kuwait Stock Exchange saw one listing in 2024, that of Investment House Holding Group Company, which offered 30% of its shares on the first market. While geopolitical developments in the region and globally affected Kuwaiti trading, the stock exchange overall recorded a positive performance, with the market index rising by 7.8% or 533.5 points to 7,350.8 points since the beginning of the year.

The market value of the listed companies had increased by 8%, or about 3.24 billion dinars to reach 43.507 billion dinars as per the closures from last Thursday.

Gold prices reached record highs in 2024

Gold prices reached record highs in 2024, heading toward an increase of about 28% by the end of the year. Kuwait’s imports of gold, precious stones, and precious metals grew by 13.4%, or 44.62 million dinars, in the first seven months of this year, totaling 377.97 million dinars ($1.247 billion), compared to 333.35 million dinars ($1.1 billion) in the same period last year.

The value of Kuwait’s gold imports amounted to 165.9 million dinars, compared to 118.5 million dinars, marking a 40% increase (47.38 million dinars).

Mubarak Al Kabeer Port

Kuwait has resumed cooperation with China to revive the massive Gulf port project, Mubarak Al Kabeer Port, which aims to become a major commercial hub at the northern end of the Gulf. The project’s revival comes about ten years after construction was halted, with work now in full swing to implement agreements made between the two parties.

The Kuwait Investment Authority also prepared a report on the renewable energy project in the Shagaya and Abdliya areas, revealing plans for solar energy projects through a joint venture with the Independent Energy Producer System (IPP).

These projects aim to support the country’s renewable energy goals and sell power to the Ministry of Electricity through long-term purchase agreements. The projects include Shagaya 3, Shagaya 4, and possibly Abdaliya, with a total value of about 800 million dollars.

Leadership change in Kuwait Investment Authority

In 2024, the management of the Kuwait Investment Authority saw a change in leadership, with Sheikh Saud Salem Al-Sabah succeeding Ghanem Al-Ghaniman, who had been appointed in 2021.

On a related note, the Board of Directors of the General Organization for Amates was reconstituted. A decree was also issued in early June to form the Board of Directors of the Central Agency for Public Tenders, aiming to resume the progress of development projects and decisions on tenders after a suspension.

Electronic payments saw a significant increase

Electronic payments saw a significant increase, reflecting a shift towards digitization by individuals and businesses in 2024. Official data shows that for the financial year ending October 31, 2024, the joint automated banking company “Knet” recorded a 17% increase in the number of transactions compared to the previous year, and a 6% increase in their amounts. Additionally, the number of point-of-sale machines grew by 5%, with their transactions rising by 20%.

Regulatory decisions

• 2024 saw prominent decisions and actions by the Ministry of Commerce and Industry to address economic and commercial changes and challenges, including:
• Organizing entrepreneurial activities for micro-companies and businesses with specialized activities, encompassing 175 activities carried out by owners without the need for a commercial store, while facilitating the submission of license applications for these companies for 4 years.
• Issuance of Ministerial Decree No. 233 of 2024, regulating the operations of exchange companies and institutions and requiring them to meet the Central Bank of Kuwait’s requirements under the Ministry’s supervision.
• Approval of new regulatory controls for real estate marketing both within and outside Kuwait, stipulating that no property can be advertised without obtaining a letter from the Kuwait Municipality, and limiting the activity to companies and institutions involved in real estate brokerage within Kuwait or any international real estate activity.
• Implementation of procedures for the non-disclosure of actual beneficiaries in companies, based on the “Money Laundering” law. In November, “Tajat” renewed the licenses of 147,300 institutions and companies that had not disclosed their actual beneficiaries, as well as activating penalties for violating entities, with fines reaching up to 500,000 dinars.
• Suspension of the transfer of mobile vehicle licenses (‘Food Türk’), whether by selling or transferring them to others, and the cancellation of licenses for mobile vehicles not complying with designated sites or licensing requirements.
• Reduction of cash transactions, as companies and institutions engaged in car sales, real estate sales, temporary trade shows, car brokerage (‘Al-Haraj’), domestic labor offices, and pharmacies (for transactions over ten dinars) were prohibited from using cash transactions.