The World Bank is of the opinion that Kuwait may achieve a surplus of about 13 percent of GDP in 2022, in light of the sharp rise in oil prices in the wake of the Russian invasion of Ukraine and the sanctions imposed on Moscow, which will allow a partial settlement of arrears amounting to about $7.7 billion on the Ministry of Finance to ministries and government institutions.

The WB pointed out that it would be better for Kuwait to seize this opportunity of the favorable public financial conditions to disengage the economy from oil and push forward structural reforms, according to a local Arabic daily.

This came in an address during a symposium held by the Kuwait Economic Society in the presence of a group of economists and specialists, to discuss the World Bank’s report on the economies of the Gulf states.

The economic sources explained that the society should continue its independent professional approach, based on its role as one of the civil society institutions in Kuwait, through positive interaction and meaningful dialogue with specialists and those interested in economic affairs.

A senior KES official said that thanks to the vaccination campaigns, the GCC countries were able to overcome the “Corona” crisis and resume their economic activity, after easing restrictions related to the pandemic, which resulted in economic recovery cases in 2021 in all countries, as public finance deficits witnessed a remarkable improvement, expected to achieve growth in economic activity this year.

In turn, Issam Abu Sulaiman, the Regional Director of the Gulf Cooperation Council countries at the World Bank said that the bank’s report, which was issued recently under the title ‘Achieving commitments related to climate change’ deals with the latest economic developments for the Gulf Cooperation Council countries.

It shows that the Gulf economies have succeeded in recovering strongly from Corona pandemic during 2021 and early this year.

He added that this recovery is due to the success of large-scale vaccination campaigns throughout the GCC countries, easing the restrictions of the pandemic, and developments in the hydrocarbon market.

He went on to say, “Our experts estimate that the economies of the Gulf Cooperation Council countries will grow by 5.9 percent during 2022 and will continue with strong momentum on the The medium term thanks to the stronger activity of the hydrocarbon and non-hydrocarbon sectors.”

Abu Suleiman pointed out that the war in Ukraine and the economic sanctions associated with it, and the significant rise in energy prices last year after the global recovery, add more uncertainty to the global economy, pointing out that this matter will have positive effects to a large extent, on the countries of the Gulf Cooperation Council, especially in terms of rising energy prices.

He explained that the international pressures resulting from the war in Ukraine and economic sanctions, may lead to additional investments to expand oil and gas production in an attempt to support the energy security of major importers, especially in countries with large spare capacity such as Saudi Arabia and the UAE, which represents a real dilemma that may delay the necessary diversification towards a non-hydrocarbon economy in the Gulf Cooperation Council countries.

He expected economic growth in Kuwait to accelerate to 5.7 percent this year, due to the rise in oil production, with the gradual cancellation of OPEC + cuts and the strengthening of domestic demand.

Abu Suleiman pointed out that at the local level, Kuwait faces several risks to oil demand in the short term, as high oil prices could destroy demand, while high prices will reduce consumption, indicating that any new outbreak of the Corona virus and tightening closures and movement procedures will harm oil demand forecasts.

He stated that for Kuwait, the traditional view is that this creates a threat given the dominance of hydrocarbons, continuing, “On the contrary, we argue that there are great opportunities for Kuwait to successful transition to a new development model that supports the diversification agenda and fiscal consolidation, with increased potential economic growth and job creation.

This comes at a time when the World Bank report predicted that real GDP will grow by about 3.6 percent during 2023 and by 2.5 percent in 2024, thanks to the strength of oil exports and credit growth, and the inflation index will reach 3.6 percent during the current year, and that it will decline to 2.8 percent next year, and then to 2.3 percent in 2024.

The report included a reading about the prospects for an 8.6 percent increase in oil production this year, with OPEC + raising production quotas and increasing the production capacity of the Al-Zour refinery.


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