In a bid to realign the demographic structure in the country, where foreigners currently account for over two-thirds of the population, the government has introduced a slew of measures aimed at reducing the number of expatriates in the country. While the successful implementation of these restructuring exercises could eventually lead to rebalance in the population structure, in the short-term it will definitely erode the country’s already precarious economic situation.
In recent months, the government has rolled out several steps aimed at restructuring the demographic imbalance, including tightening the issuance of new visas, limiting transfer of existing visas, banning the renewal of visas for those aged 60 and over, if they do not have a university degree. These measures, along with an aggressive Kuwaitization drive that has led to the termination of expatriates from public sector jobs, will no doubt result in a significant number of expatriates being forced out of the country.
However, the enmasse eviction of foreigners is bound to cause severe repercussions on various sectors of the economy, especially on real estate, retail, restaurant, travel, medical care and education sectors. The real estate sector, in particular the commercial and residential sections, could be severely impacted by any sharp reduction in expatriate numbers, as many of the shops and apartments are rented by foreigners.
Any severe repercussion on the real estate sector has the potential to snowball and affect the banking and financial sectors, as many of the buildings have been erected with loans from financial institutions. With the economy already struggling from the COVID-19 crisis, any impact on the banking and financial sector that forms an integral part of the economy could lead to a recession that would derail any immediate prospects of growth and development for the country.
In August, the Parliament’s Human Resources panel, which is tasked with examining ways to redress the demographic imbalance and limit the number of expatriates working in the country, had noted that any sudden and large-scale reduction in the number of foreigners would have serious negative repercussions for the economy.
The report in particular noted that any enmasse reduction of expatriates could witness an appreciable slump in sales in retail and travel sectors, while real estate would have to cope with a large number of vacant flats and unsold apartments. Real estate owners worry that any sudden and large exit of expatriates could see prices of investment properties fall by as much as 25 percent, while occupancy rates in residential properties could drop by nearly 50 percent in some areas.
