Middle East: Kuwait still cooking with falling oil
The country is vulnerable to a continuing low oil price, but that doesn’t seem to be stopping it from keeping up the pace of capital projects. And there are still plenty of reforms to make if the state is to develop the economy.
How to read the outlook for Kuwait and its banking sector? Positive: vast oil wealth, managed, in large part, by one of the world’s most respected sovereign wealth funds. Negative: collapsed oil prices and a dramatically increased break-even cost for the budget, creating a burden on planned spending.
Positive: a sense of progress, at long last, on Kuwait’s much-heralded mega-projects. Negative: familiar problems of inertia and bureaucracy preventing more getting underway.
Positive: the creation of a capital markets regulator and grand ambitions of building a financial hub. Negative: plenty else that needs fixing and modernizing in financial markets, with a real prospect of being left behind if progress is not made swiftly.
Kuwait is one of the largest losers from the oil price decline, because a very large part of their GDP is oil. They do have a lot of foreign reserves, but not that high compared to other oil producers
Raphie Hayat, Rabobank
It is resplendently self-evident that oil exporters suffer in an era of low oil prices, but what is sometimes lost is the degree of variance between those exporters – especially individual Gulf states – and their particular vulnerabilities.