THE OIL AND GAS ECONOMY OF KUWAIT

The Oil and Gas Economy of Kuwait

The Oil and Gas Economy of Kuwait

Introduction

Oil and oil related products have tended to dominate the economy since the production of oil from the Burgan field commenced in the 1940s. As long as oil remains a valuable energy source, it will continue to play a substantial role in the future economy of the country. Kuwait has about 10% of the world's proven oil reserves which are estimated to last for another 100 years at the present level of extraction.

Exports of oil and oil related products represent more than 90% of total exports. For the year 1997, total exports including re-exports were US$14.3 billion of which oil and oil related products were $13.6 billion. This is a remarkable accomplishment given the fact that the oil industry infrastructure was virtually destroyed during the invasion by Iraq in 1990 and 1991. (Daniels, 2007, 21)

The Economy of Kuwait

A number of the more important statistics for 1997 illustrate the size and various features of the economy. The balance of trade surplus continues to grow at $6.8 billion with the current account balance at a very healthy $6.5 billion. Both of these figures illustrate the robust state of the external trade and current account. Imports from America (20%) and Western Europe (35%) account for the major part of imports. Kuwait has one of the largest gross domestic products in the region at $31.5 billion in current prices. This figure continues to grow each year and was up from $24.1 billion in 1994. GDP per capita of Kuwaiti population is a very healthy $42,000 which again continues to grow each year and was up from $35,000 in 1994. (Daniels, 2007, 21)

The Government continues to pursue a policy of a balanced domestic budget. Despite the very high expenditures in the years following the invasion required to rebuild the country and which therefore necessitated deficits, these deficits have been reduced gradually over the years. In fact, provisional data for the fiscal year 1996/1997 indicates that a surplus of over $1.5 billion will be achieved, which is a magnificent achievement. Whilst this outstanding performance can mainly be attributed to the growing oil revenue, the success of the privatization program has reduced the financial burden of a number of public utilities on the central budget.

The demographic figures provide some interesting statistics. According to the latest census carried out in 1997, the total population of Kuwait was 2.21 million. There were 760,000 (34%) Kuwaitis and 1,450,000 (66%) non-Kuwaitis. Of the non-Kuwaiti population, 460,000 or 32 % were from other Arab States, 970,000 or 67% from the Asian countries with the balance mainly from Western Europe and America. (Mansfield, 2007, 118) There were about 197,000 Kuwaitis in the labor force of which 185,000 (94%) were employed in the public sector; whereas, the majority (84%) of the non-Kuwaiti working population of just over 1 million work in the private sector. The majority of non-Kuwaitis are single expatriates who are employed ...