IMF Expects Kuwait's Economy to Contract by 16.7% in 2026

The International Monetary Fund (IMF) has projected that Kuwait’s gross domestic product (GDP) will contract by 16.7% in 2026, before resuming growth at a rate of 17.1% in 2027, according to its “World Economic Outlook” report. The report noted that the Kuwaiti economy is being affected by disruptions in energy production, transportation, and exports.

The IMF clarified that Kuwait is among the commodity-producing countries most impacted by these disruptions, citing halted production and exports, as well as disruptions to shipping movements. It forecast that the economic contraction in some energy-producing countries will exceed 10% this year.

Regarding inflation, the report projected that Kuwait’s inflation rate will decline to 2.2% in 2026, down from 2.4% in 2025, before rising again to 2.4% in 2027. As for the current account surplus, the IMF expects it to decrease from 22.7% of GDP in 2025 to 18.3% in 2026, before rising to 24.9% the following year.

The forecasts indicate that economic recovery in 2027 will be linked to the return of energy production, exports, and logistics to normal levels, as well as improved navigation following the reopening of the Strait of Hormuz.

Earlier, the World Bank, in its regional economic report for the Gulf region, projected that Kuwait’s economy would contract by 14.6% in 2026, followed by growth of 22% in 2027, driven by the gradual recovery of hydrocarbon production and the return of oil exports to normal levels. The Bank noted that the expected contraction this year will be the largest for Kuwait in over three decades, due to damage to energy infrastructure and limited alternative routes for exporting hydrocarbons.