Kuwaiti Economy Rises To 3 Percent In 2016 - World Bank

The World Bank said on Thursday that 2016 economic growth in Kuwait climbed at a "modest" pace to three percent due to higher oil production and the implementation of major infrastructure projects.

Speaking at its main office in Kuwait in a joint televised press conference from Washington and Riyadh, the bank's Chief GCC Economist Tehmina Khan said that non oil estimates for Kuwait remain "strong." Kuwait's economic outlook remains "relatively resilient" due to substantial oil buffers and government reform plans, she added, commenting on a new World Bank report which also projects "modest" growth in the six GCC states over the next six months.

Sustaining this would depend on the Kuwaiti government's ability to implement its six-point reform plan, she said. The expert also hailed the government's awareness on increasing the private sector's role, which she said would be key in sustaining these reforms.

For his part, Country Director for the GCC Countries Nadir Mohammed said that Kuwait is one of the lowest countries in the region in regards to public debt and would be one of the quickest to return to surpluses.

In its report, the World Bank's outlook until December showed Kuwait as the third least country with general government gross debt (just under 20 percent of GDP) behind the UAE and Saudi Arabia.

The report also projected that growth in GCC states, as a whole, would "gradually recover" from 1.3 percent in 2017 to 2.6 percent in 2019. Regarding the non oil sector, the report expected a gradual recovery due to the slowing pace of fiscal austerity and major reform plans. "The green shoots of recovery are cropping up, helped by the recovery in global energy prices over the past year," said Mohammed.

"That's good for public finances across the region," he said, adding this provides space for governments to focus on long term challenges. Hailing reform plans currently being assumed by the six countries, he added that GCC states should alter their focus on short term spending cuts towards "deeper, multi-dimensional fiscal policy and institutional reforms," such as value-added tax.

However, he noted to several risks, namely regional geopolitical developments, turbulence in global markets and the production of shale oil in North America.

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