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Opec oil cuts add to economy decline in Kuwait

Kuwait Opec cuts Alamy
Kuwait's oil sector recorded a fall in the third quarter of 2024 for the sixth successive quarter
  • 4% drop in Q3
  • Sixth successive oil output fall
  • Rebound expected in 2025

The economy of Kuwait shrank by about 4 percent year on year in the third quarter of 2024 because of Opec oil production cuts and under-performance in parts of the non-oil sector.

However, the economy is expected to rebound through 2025, a report by the Kuwait Statistical Bureau said.

Lower production caused the oil sector to dip by five percent in Q3, while the non-oil sector dropped by 2.5 percent, the bureau said.

After a strong first half of 2024, the non-oil sector weakened in Q3 as a result of a downturn in several sectors, including industry and defence, said the report, published by the National Bank of Kuwait on Wednesday, along with analysis of Kuwait’s GDP.

“Expectations in the short term are optimistic following Opec’s decision to freeze production cuts in April this year as well as a decline in interest rates, which will spur investments in Kuwait,” the report said.

It said more development projects were awarded, and accelerated implementation of the economic development plan was to be expected.

The report added: “As for 2025, growth projections are generally positive as expectations point to gradual recovery amid an expected improvement in consumer spending albeit modest… besides, there has been a marked increase in credit and the announcement of development projects, which surged in the fourth quarter to their highest level in eight years.”

Kuwait’s Arabic-language daily Alanba, citing the finance ministry, said in a report on Thursday that  projects awarded in 2024 stood at just over KWD1 billion ($3.2 billion).

Kuwait economy at a glance

Construction projects topped the list of awarded contacts, with a total value of KWD318 million, the report said.

The National Bank of Kuwait said the oil sector recorded a fall in the third quarter of 2024 for the sixth successive quarter. It said Kuwait’s crude output averaged around 2.4 million barrels per day (bpd) last year, in line with Opec’s quota system.

Kuwait’s oil production is expected to pick up by 7,000 bpd a month from April and boost the country’s production to nearly 2.55 million bpd by September next year, the report said.

“Given these increases and assuming Opec will not extend production cuts, Kuwait’s GDP is forecast to return to growth in the second quarter of 2025,” it said.