Kuwait's economy strengthens resilience and investment appeal with support for the banking sector and project momentum
- Infrastructure projects drive national development with a massive investment portfolio
- 1.7% non-performing loans and 223% provisions in Kuwaiti banks
- $166.5 billion in active projects across various economic sectors
- $118 billion in projects in the pre-execution phase, led by electricity and water with $43.8 billion
- $3.3 billion awarded for the North Kabd plant contract, raising water contracts to over $4 billion
The Kuwaiti economy has demonstrated a notable ability to maintain momentum in investment and financial activity. The country has witnessed a series of major deals and issuances, reflecting the continued attractiveness of Kuwaiti assets and the confidence of international investment institutions in the long-term resilience of its economy and financial reserves.
This investment optimism is grounded in a solid economic base. Data recently published by MEED magazine indicates a steady recovery in nominal GDP, which is projected to rise to $172.9 billion, with forecasts suggesting continued growth to reach $175 billion.
At the same time, the inflation rate has remained stable and moderate, maintaining balanced levels between 2.5% and 3%. This stability enhances purchasing power and supports the stability of local markets.
In late July, Kuwait Oil Company signed a historic lease and leaseback deal worth $16 billion with global companies including Blackstone, Brookfield, and KKR. The deal covers the entire crude oil pipeline network, marking the largest foreign direct investment in the country’s history. The transaction is expected to generate immediate cash proceeds of $7.85 billion, thereby strengthening the company’s financial flexibility and its capacity to continue investing in its operations and future projects.
A few days prior, the government successfully returned to international debt markets by issuing $6 billion in bonds. This was the second issuance since the approval of the Public Debt Law by decree, aligning with a future financing plan that will see the government debt-to-GDP ratio rise to 22.3% and then 27.5% in 2026 and 2027, respectively. These levels are considered safe, providing the state with high financial flexibility to fund developmental projects.
The Kuwaiti financial sector has proven to be one of the pillars of economic stability. Kuwaiti banks entered the year with strong and comfortable capital levels, while non-performing loan ratios hit record lows of just 1.7%. Meanwhile, the coverage ratio for provisions against non-performing loans reached 223%.
Since the onset of geopolitical tensions in the region, the Central Bank of Kuwait has eased liquidity requirements and encouraged lending. This step aimed to enhance the banking sector’s ability to support all economic sectors and provide the necessary financing for projects.
Culminating this financial resilience, global credit rating agencies have maintained their positive and stable outlook on the sector. Moody’s confirmed the credit ratings of deposits at eight Kuwaiti banks, reflecting entrenched international confidence in the strength of the Kuwaiti banking system.
Parallel to financial and investment activity, the government has continued to push forward developmental projects with steady momentum. The project market is witnessing a significant positive shift, with the value of new contract awards reaching billions of dollars. This surpasses the volume of completed projects, recording a positive net change in market activity.
Data from infrastructure plans indicate a large and active project portfolio with a combined value of $166.5 billion, including $48.5 billion in projects under implementation and $118 billion in projects at the pre-implementation stage. The electricity and water sector leads future plans, with $43.8 billion earmarked for pre-implementation and $16 billion under implementation.
The awarding of the $3.3 billion North Kabd wastewater treatment plant project to the Chinese state-owned engineering construction company CSCEC has boosted the total value of awarded water contracts to over $4 billion, marking the sector’s best performance in years.
Other active pre-implementation projects are distributed across key sectors: construction and building holds $34.7 billion, with $10.4 billion under implementation; energy and industry account for $23.8 billion, with $6.6 billion under implementation; and transport and communications total $15.7 billion, with $15.5 billion under implementation.
Collectively, these developments indicate Kuwait’s continued ability to access international funding sources and attract foreign capital, alongside the ongoing execution of infrastructure and vital facility projects to secure the country’s strategic development future.
