Economic growth rate in Kuwait could fall to 0.4 percent in 2019 before rebounding to 2.2 percent in 2020, “as the OPEC production cuts expire” and register 2 percent in 2021 “as the government increases spending on oil capacity enhancements and infrastructure to boost the non-oil sector, said the World Bank in a new report on the region.
In its latest Gulf Economic Update, the World Bank also said that economic growth in the Gulf Cooperation Council (GCC) states was “significantly weakened” this year due to “muted oil prices and excess oil supply.”
The report added that “while most GCC countries retained strong external positions in 2019, the ongoing slowdown in China and the continued global trade war are hindering their efforts to boost non-oil exports.” It indicated that overall real GDP growth in the GCC is estimated to drop to 0.8 percent this year compared with two percent last year.
Pointing out that “many countries in the region have pursued ‘traditional diversification’, which has meant diversifying away from hydrocarbon production towards heavy industries that still depend on fossil fuels.”
“The emissions-intensive nature of ‘traditional diversification’ has increased the GCC countries’ exposure to disruptive low-carbon technologies, international policy efforts to address climate change, and negative public perceptions of fossil fuels and their derivatives,” warned the report.
Elaborating on the findings in its Gulf Economic Update, World Bank Regional Director for the GCC Issam Abousleiman said: “As GCC countries strive to diversify their economies, they should ensure that diversification strategies are aligned with environmental sustainability goals.” He added that this was important not only for environmental sustainability but also to help the GCC invest in sources of growth that are resilient to global technology and policy impacts.