Kuwait Falls 27 Spots On The Heritage Efi Index, Slipping To The 101st Spot In The World

Kuwait has fallen 27 places on the International Heritage Foundation's Economic Freedom Index for 2022. Kuwait is now placed 101st in the world, down from 74th in 2021, and sixth in the Arab world, behind the UAE, Qatar, Bahrain, Jordan, and Morocco

Kuwait scored 58.3 out of 100 points in the general index, better than the regional average but lower than the global average, according to Al-Rai, with the Kuwaiti economy defined as 'mostly not free' by the index.

In its classification of 177 countries, the index is based on four main factors: the rule of law, which includes property rights, judicial effectiveness, and government integrity; the open market, which includes freedom of investment, trade, and financial freedom; and the regulatory environment's efficiency, which includes freedom of doing business, monetary freedom, and freedom of work; and the size of the government, which includes the tax burden, government size, and government size.

Kuwait's ranking fell in most of these sub-indicators, except for tax burden, financial soundness, investment freedom, and financial freedom, which stayed unchanged from the previous year's grade.

The Kuwaiti economy declined in 2020 and then returned in 2021, according to the report, after accelerating from 2017 to 2018 and slowing in 2019, although the fragility of economic freedom, in general, worsened throughout the same period.

Kuwait has dropped from the "moderately free" to the "largely not free" category after losing 6.8 points in economic freedom since 2017. Heritage also stated that the economy is weighed down by government spending, notwithstanding the budgetary health of the country.

In terms of strictness, the government's response to the "Covid-19" problem placed 99th among the countries in this indicator, while the GDP contracted by 8.1 percent in 2020.

In terms of Kuwait's size, the research stated that there are no individual income taxes in Kuwait, but foreign-owned enterprises and joint ventures are subject to a 15% corporate income tax, with a total tax burden of 1.4 percent of total domestic revenue.

In terms of the regulatory environment's efficiency, Heritage claims that slow bureaucracy and restrictive economic policies stifle the private sector's growth, noting that many Kuwaitis prefer government positions and are unaccustomed to working in the private sector.

The average trade-weighted tariff rate is 4.7 percent, and there are 57 non-customs measures in place, according to the research, adding that the Kuwaiti economy benefits from openness to foreign investment, but some sectors are closed. Portfolio investments are encouraged and welcomed by the modern financial regulator, the banking system remains well-capitalized, and a more dynamic capital market is emerging.

The UAE came first in the region, followed by Qatar and Bahrain, with Algeria, Lebanon, and Egypt following suit. Singapore, Switzerland, Ireland, New Zealand, Luxembourg, Taiwan, and Estonia have the world's most open economies.

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