The ruling Al Sabah family will remain in power in 2014-18, supported by their extensive use of patronage to keep the population contented. However, we expect political tensions to rise in the early part of the forecast period as opposition allegations of high-level corruption and the government's hardline response to political demonstrations negatively affect political stability. Ruling family rivalries over the succession will also spill into parliamentary politics. We expect the ruling family to come under pressure to allow political reform, particularly if the opposition finds a way to strengthen its currently fragmented position. Efforts to improve the working relationship between the government and parliament in the second half of the forecast period should pave the way for greater economic liberalisation The government will prioritise its latest development plan, and take advantage of lulls in political tensions to make better progress on national infrastructure projects.
Kuwait's economy will remain dependent on the oil sector. However, Kuwait's large foreign assets and fiscal and external surpluses would provide support for its economic position even in the event of a sustained slump in oil prices. Real GDP growth is projected to average 3-8 % over the forecast period, underpinned by oil production and increased government expenditure. Although capital expenditure will rise as the government seeks to follow through on infrastructure projects, unproductive current spending is expected to continue to account for the lion's share of government expenditure. Both the current and fiscal accounts will remain in surplus over the forecast period, although these i Will narrow considerably as a result of declining global oil prices.
The long-term outlook will continue to depend on oil output, and thus also on fluctuating international oil prices. Oil production capacity will increase steadily through capacity-boosting projects, keeping real GDP growth high. The form of the political system will be questioned, and in the longer term some reforms will be introduced. The government's renewed commitment to structural reform is expected to lead to some reduction in Kuwait's dependence on hydrocarbons and the state dominance of the economy. Kuwait's military alignment with the US will remain its key foreign policy relationship, givers common regional political and security concerns.

Kuwait-highlights 7

Political outlook 7

Demographic outlook 7

Business environment outlook 7

Economic outlook 8

Market opportunities 8

Long-term outlook 8

Fact sheet 9

Political outlook 10

Political forces at a glance 10

Political stability 10

Political and institutional effectiveness 11

Election watch 12

Key players to watch 13

International relations 13

Demographic assumptions 15

Business environment outlook 17

Kuwait's business environment at a glance 18

Macroeconomic environment 19

Policy towards private enterprise and competition 19

Policy towards foreign investment 21

Foreign trade and exchange controls 22

Taxes 23

Financing 23

The labour market 25

Infrastructure 26

Economic forecast 27

Policy trends 27

Fiscal policy 28

Monetary policy 28

International assumptions 29

Economic growth 29

Sectoral trends 30

Inflation 32

Exchange rates 33

External sector 33

Foreign direct investment in Kuwait 34

Market opportunities 36

Market outlook 36

Long-term outlook 38

The long-term outlook 38

Methodology for long-term forecasts 41

Data summary 43

Data sources and definitions 48

Guide to the business rankings model 49

Indicator scores in the business rankings model 50

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