Kuwait's Main Business Sectors
Like many other countries, Kuwait was still feeling the effects of the global economic crisis at the end of 2009. Signs of recovery in Japan, the US, and countries of the European Union have brought hope, as has the steady but slow rise in oil prices. That is important for Kuwait, as it depends quite heavily on exports of oil.
Kuwait's budget for 2008-2009 showed a $16.5 billion surplus, while the budget for this year is expected to reflect a $5 billion surplus. Oil accounts for about ninety-five percent of Kuwait's revenue, and exports from other sectors remain modest. Kuwait's SWF (Sovereign Wealth Fund) is thought to have lost over thirty billion in foreign investments, and that combined with 2008-09's sharp drop in oil prices has forced the country's government to rethink its infrastructure priorities.
The driving force of the Kuwaiti economy remains the public sector, making up about 75% of the country's GDP. While many governments were increasing capital spending to jump-start their economies, Kuwait downsized its budget by 26%, slowing down its economic recovery. However, there are still some Kuwaiti business sectors that are seeing heavy spending, such as:
Oil and gas. This sector is Kuwait's economic lifeline, so modernization and expansion are always near the top of the government's list of priorities. One key goal is to increase crude production from its current level of 2.6 million barrels per day to 4 million by 2020. There are also plans in place to increase Kuwait's refining capacity from its current level of 900,000 barrels per day, through the building of a $7 billion refinery.
Water and power. Like the oil and gas sector, the utilities sector is protected from cuts in spending. Rationalizing its power and water consumption is a constant struggle for Kuwait, especially when considering the country's heightened summertime electricity use. Plans are ongoing to increase power generation from the current 11,000 megawatts to 15,000 Mw.
The public health sector is relatively healthy, and the Kuwaiti government is being proactive about the poor quality of public health services. A public hospital with a cost of $1.2 billion was finished in 2009, while about a dozen other privately-owned hospitals have gotten their licenses. These new hospitals will meet the demand for medical treatment abroad, as well as accommodate visiting physicians.
Despite the slowdown that came from the postponement of various infrastructure projects, Kuwait's construction sector has potential because of urban expansion plans. Larger projects include Silk City (a commercial port on an uninhabited island), and the changing of a smaller island into a tourist destination.
The financial services sector continues to be robust, as it recovers from the worldwide economic crisis. Some of Kuwait's nine commercial banks and more than a hundred companies are reaping the benefits of the government stimulus plan. High public and private liquidity makes the services sector very lucrative for foreign investors. Quickly rising in popularity is the Islamic banking segment; three local banks and more than fifty investment companies are offering services in line with Sharia law.
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