Kuwait faces many of the same challenges as other oil-exporting economies in the Gulf Co-operation Council. With downward pressures on commodity prices expected to persist over the medium term, the country's government is being forced to cut spending while it pursues a strategy of non-oil diversification. A growing population also means that the authorities must find ways of stimulating private sector job creation while cutting the public sector wage bill. There is little doubt that these tasks will be difficult in the current environment.
But unlike many of its regional counterparts, Kuwait is facing these problems from a singular position of strength. For one, the government’s balance sheet is exceptionally strong. Assets held by the Kuwait Investment Authority, the country’s sovereign wealth fund, are estimated to be more than 400% of gross domestic product (GDP), or $550bn, according to the National Bank of Kuwait, while government debt levels are just 8.3% of GDP.
