Kuwait’s SMEs battle for survival as war, shipping chaos, and weak demand batter businesses
Entrepreneurs face mounting pressure amid regional crisis, rising costs, falling sales as Strait of Hormuz disruptions deepen economic strain
Kuwait’s small and medium-sized enterprises (SMEs) are facing one of the toughest periods since the COVID-19 pandemic, as regional conflict, soaring shipping costs and weakened consumer spending continue to erode revenues and threaten the survival of thousands of businesses across the country.
Entrepreneurs and economic experts warn that many youth-led projects are now operating under severe financial pressure while struggling to meet fixed monthly obligations such as rent, salaries and supplier payments.
The crisis has intensified following disruptions to supply chains in the Strait of Hormuz, a key global shipping route that directly impacts Kuwait’s import-dependent economy.
Many shipping companies temporarily halted operations in the Arabian Gulf or rerouted fleets to alternative destinations, creating logistical bottlenecks and driving up transportation and insurance costs. Business owners say the repercussions are being felt across almost every sector of the economy, a local daily reports.
The SMEs are now trapped between escalating operational costs and declining purchasing power, placing intense pressure on profit margins and increasing the fragility of business continuity. The Kuwaiti entrepreneurs had already demonstrated resilience during the COVID-19 crisis and are now enduring yet another economic shock.
Entrepreneurs describe current crisis as more severe than the pandemic because it represents a “double shock” affecting both supply and demand simultaneously. He explained that businesses are now required to generate higher revenues simply to maintain previous activity levels due to rapidly rising costs.
They say the maritime shipping crisis will continue long after the Strait of Hormuz fully reopens since global supply chains could take between three and six months to regain stability due to the scale of disruptions caused during the conflict period.
According to estimates cited by business owners, energy prices could rise by as much as 24 percent this year, potentially pushing oil prices to between $95 and $115 per barrel if regional tensions persist. They say this cost escalation creates a difficult dilemma: either raise prices and risk losing customers, or absorb higher costs at the expense of profitability.
According to some entrepreneurs, the crisis has exposed a structural gap between existing government support tools and the real size of the SME market.
While the Central Bank of Kuwait introduced precautionary measures including loan installment postponements and banking flexibility to ease financial pressure, these measures remain temporary solutions that do not address the root causes of declining demand and rising operating costs.
Entrepreneurs and business experts are now urging the government to move beyond temporary relief measures toward a comprehensive economic stimulus plan that protects viable SMEs from collapse. Their proposals include easy financing, postponement of financial obligations, rental support, and urgent legislative reforms to protect businesses from eviction during crises.
As regional uncertainty continues and operating costs climb higher, Kuwait’s SME sector now faces a defining moment.
Economists warn that without swift and comprehensive intervention, the current pressures could evolve into a broader wave of business closures with serious consequences for employment, market stability and the country’s wider economic future.
