Kuwait’s economy have been heavily dependent on oil revenues more than any other sector. The high oil prices over the past decade has worked to the state’s advantage as nominal GDP growth has averaged more than 20% to see the economy grow to more than $183 billion in 2012. GDP growth is at 5% in 2014 and oil production remains key, however, non-oil sector growth is likely to rebound to 5.2 percent in 2014 from the 4.6 percent reported for 2013, on the back of further recovery in the manufacturing, construction and real estate sectors following the strong government capital expenditure budget allocation for the 2013-14 financial year. Inflation is expected to rise from 2.6% in 2013 to 3% in 2014, and 3.5% in 2015.
Given lower oil productions and below average oil prices, softer economic growth are forecasted. showing the need to diversify sources of income that rely heavily on petroleum. The other major related issue is the heavy involvement of the state in economic activity. More than 90 per cent of the local working population work for the government. As a result, private sector growth has been stunted and remains heavily reliant on government spending.
The economy remains largely closed and unreformed with an inefficient government bureaucracy and restrictive labour conditions. Foreign firms have to pay up to 55% tax on their profits and there is limited consequent international investment.
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