Improved Geopolitical Climate Leads Economy to Recovery in the Last Quarter
Experts: Strong indicators point to the restoration of operational stability and capital inflows
Mohamed Ramadan: Financial buffers enabled the state to confront crises efficiently despite declining oil revenues
Ahmed Al-Sandan: Sound economic performance will positively reflect on stock market trading
Najeah Bilal
The easing of geopolitical tensions heralds a fourth quarter capable of absorbing shocks and stimulating local economic performance in 2026, amid strong indicators pointing to the restoration of operational stability and capital inflows. This relative calm, according to statements by two economic experts to "Al-Siyasah," serves as a fundamental pillar that has supported the national economy, which has demonstrated exceptional resilience in the face of current geopolitical tensions, backed by solid financial adequacy and substantial sovereign reserves.
In this context, former Ministry of Finance advisor and economic expert Mohamed Ramadan emphasized that these financial buffers enabled the state to confront crises efficiently, despite the decline in oil revenues resulting from the Kuwait Petroleum Corporation declaring force majeure following the closure of the Strait of Hormuz. He noted that the strength of government capital expenditure on strategic projects succeeded in revitalizing the local market and stimulating the economic cycle, affirming that this sound performance of the national economy has positively and directly reflected on trading activity in the stock market, predicting that this positive performance will continue during the last quarter of the current year.
Positive signs of recovery
In a related development, economic expert Ahmed Al-Sandan confirmed that official economic and financial indicators released in the last quarter of 2026 show gradual and flexible recovery signs for the Kuwaiti economy and the Kuwait Stock Exchange, paving the way for stable performance. This improvement is driven by markets absorbing shocks from previous regional geopolitical tensions and the return of momentum to capital and commercial spending. This recovery is reflected in the expectations of international institutions, such as the International Monetary Fund, which forecasts real GDP growth for Kuwait to reach approximately 4% in 2026, supported by the resilience of non-oil activities alongside robust consumer spending, which reached about 32.77 billion dinars from the beginning of the year until the end of July last year through electronic and cash payment channels. Additionally, capital spending on oil projects continued at 2.3 billion dinars to enhance major development projects, the approval of liquidity legislation, and the issuance of debt instruments, which contributed to alleviating pressure on the general reserve and improving the state’s credit rating.
Decline in regional risks
On the capital markets front, Al-Sandani revealed that the Kuwait Stock Exchange successfully absorbed the negative impacts of mid-year tensions, driven by a decline in regional risks. This coincided with the leadership of major banking stocks, including National Bank of Kuwait and Kuwait Finance House, which facilitated a recovery in the market index. He emphasized that the country’s robust sovereign solvency and entrenched regulatory framework prevented any structural setbacks during the peak of crises in the second and third quarters of this year. He noted that the state’s effective economic management contributed to revitalizing the local market and stimulating the economic cycle.
Al-Sandani affirmed that this strong performance of the national economy had a direct and positive impact on trading activity in the stock market, with expectations that this positive momentum will continue through the final quarter of the year. At the same time, he anticipated that anticipated regional stability, coupled with the continued flow of government capital expenditure supporting developmental activities, would pave the way for injecting new liquidity into a broad range of available investment channels. This, in turn, would enhance the market’s long-term capital attractiveness.
**Economic Resilience**
He pointed out that the second and third quarters of this year constituted a true test of the economy’s resilience. However, the efficiency of Kuwait’s economic infrastructure and its proactive capacity to confront challenges—thanks to strong sovereign financial buffers and entrenched structural frameworks—played a decisive role in protecting stock market trading from sliding into sharp losses or fundamental collapses. This bolstered the market’s long-term investment appeal. Furthermore, hedging policies contributed to maintaining stable market valuations.
