Economic contraction in the oil sector causes a decrease in Kuwait's GDP in 2024.
In the forthcoming year of 2024, Kuwait's economy finds itself in the midst of transformative shifts, as the oil and non-oil sectors each undergo a significant shuffle.
Starting with the oil sector, it's taking a hit by sticking to the production cuts mandated by OPEC+. As a result, the oil GDP plummets by a whopping 10.9%, settling at KD21.3 billion, down from KD24 billion in 2023. This decline is even more noticeable in the final quarter of 2024, where oil GDP drops by 5.7% year-over-year.
In terms of raw production, Kuwait cranks out 2.41 million barrels per day (mb/d) in 2024, a decrease from previous years' figures.
Conversely, the non-oil sector springs back to life, exhibiting exceptional growth, particularly in the final quarter of 2024. This quarter alone sees non-oil GDP expand by a robust 4%, making a rebound after a contraction in Q3. In fact, on a quarterly basis, non-oil GDP balloons by 14.6% in Q4. This vigorous growth can be attributed to strong performances in construction, manufacturing, and services.
The overall annual growth for 2024 stands at 1.8%, an improvement from the 1% observed in 2023. sectors like real estate, rent, and business activities, in addition to education and financial services, contribute significantly to this growth. By the end of 2024, the non-oil sector lays claim to an impressive 86% of Kuwait's total GDP output, accentuating its ever-increasing importance in the country's economy.
Additionally, it's worth noting that while oil GDP undergoes a significant decline at current prices, this trend persists when examining GDP values at constant prices. At constant prices, Kuwait's total GDP declines by 2.6% to KD40.3 billion, down from KD41.4 billion in 2023, with the oil sector's share dropping to 47.9% in 2024 from 49.9% in 2023.
In summary, while the oil sector faces hurdles due to production cuts, the non-oil sector signals a ray of hope and growth potential, playing a commendable role in the overall stability of Kuwait's economy.
The non-oil sector, showing remarkable improvement, experiences significant growth in financial services, contributing substantially to the overall growth of Kuwait's economy in 2024.
Recognizing the decline in the oil sector, financial institutions within Kuwait may shift their focus and investments towards the burgeoning non-oil sector, recognizing its increasing importance within the industry.
