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Thu 26 Oct 2017 10:14 AM

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Kuwait's diversification set for slow progress, says report

Progress over the next decade will be impeded by reform obstacles, says BMI Research

Kuwait's diversification set for slow progress, says report
BMI Research said Kuwait's diversification drive is likely to move forward slowly, with a challenging operating environment, political gridlock and somewhat less impetus for reform than many other GCC countries all weighing on the pace of change.

BMI Research said Kuwait's diversification drive is likely to move forward slowly, with a challenging operating environment, political gridlock and somewhat less impetus for reform than many other GCC countries all weighing on the pace of change.

“We expect only gradual progress toward economic diversification in Kuwait over the next decade, with myriad structural obstacles tempering the pace of reform,” the company said in a statement.

The GCC country launched its New Kuwait 2035 programme in January of this year. Aims included increasing state revenue from an estimated KWD13.3bn to KWD50 bn by 2035; reducing expatriate workers from 70% of the population to 6 0%; developing the country's tourism sector; positioning the country as a global hub for petrochemical manufacturing ; improving key utility, renewables and trans port infrastructure; and boos ting foreign investment by 30 0%.

“Kuwait shares many of the same challenges faced by other countries within the GCC when it comes to diversification, with competition from other Gulf countries in growing their target sectors, challenging labour market dynamics and the sheer magnitude of the planned reforms will all likely act as headwinds,” BMI Research said.

Moreover, this is only exacerbated by challenges specific to Kuwait, which has the weakest business environment in the region according to BMI Research’s proprietary Operational Risk Index and is subject to persistent political gridlock.