Effects of reforms on Kuwait economy still unclear: Expert

By Majd Othman

KUWAIT: Economic researcher Mohammad Ramadan spoke to Kuwait Times about the economic expectations for Kuwait for 2023, saying that due to the political instability in the country and the economic situation that is not a priority for the government, representatives or citizens themselves, therefore, it is hard to predict the economic situation for the country in 2023.

He said although the country is witnessing clear indications of a decrease in corruption in various governmental entities, the effect of these reforms on the local economy is still unclear, as it depends on the type of reforms that the new officials will achieve after take charge of various bodies in the country.

On oil prices, Ramadan said the current status globally is still foggy due to the sudden decisions that could be taken by Russia and OPEC+, with the West imposing sanctions, while expectations from international credit bodies vary greatly, as some of them expect oil price in 2023 to be $80 to $90, while others forecast prices will drop to $60 or $50 per barrel.

Ramadan pointed out Kuwait is still facing some basic issues that can change the economic situation if approved, such as wage hikes, especially with the approval of the government in principle, which will definitely affect the purchasing habits of citizens and residents, and could determine which economic activity will witness growth and therefore improve parts of the local economy.

"Improving capital spending is one of the most important annual promises the government makes consistently, but administrative obstacles hinder spending and disserve the results the country is waiting for, not to mention the local economy suffers from a lack of development. Getting rid of these obstacles will take the economy at a higher speed," Ramadan said.

Kuwait's economic growth indicators

Ramadan clarified there are some main indicators in Kuwait that determine the economic status of the country, which is related to the Corruptions Perceptions and Ease of Doing Business indices, in addition to the improvement of government procedures. "The index reports will give us a clear view of the situation at the beginning of the year and also help us predict what could happen in the economy this year," he said.

Zero-COVID Policy

After China decided to abandon its zero-COVID strategy, Kuwait Times asked Ramadan how this can positively reflect on the Kuwaiti market. "It would benefit Kuwait and the GCC area in general. China buys Russian oil at a cheap price and dropped its zero-COVID policy, which will help the country to increase production and reduce costs. This will lead to a decline in commodity prices and reduce inflation," he said.