Economy of Kuwait

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Kuwait is a small, relatively open economy with proven crude oil reserves of about 96 billion barrels (15 kmĀ³), i.e. about 9% of world reserves. Petroleum accounts for nearly half of GDP, 90% of export revenues, and 95% of government income. Kuwait lacks water and has practically no arable land, thus preventing development of agriculture. About 75% of potable water must be distilled or imported. Higher oil prices reduced the budget deficit from $5.5 billion to $3 billion in 1999, and prices are expected to remain relatively strong throughout 2000. The government is proceeding slowly with reforms. It inaugurated Kuwait's first free-trade zone in 1999 and will continue discussions with foreign oil companies to develop fields in the northern part of the country.

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Economy in greater depth

Kuwait is one of the richest countries in the Muslim world. Current GDP per capita reached astonishing peak growth of 439% in the 1970s.[3] But this proved unsustainable and contracted by 58% in the 1980s. However rising global oil demand helped register growth of 91% in the 1990s. Diversification is a long-term issue for this over-exposed economy.

Macro-economic trend

This is a chart of trend of gross domestic product of Kuwait at market prices estimated by the International Monetary Fund with figures in millions of Kuwaiti Dinars.[4]

For purchasing power parity comparisons, the US Dollar is exchanged at 0.48 Kuwaiti Dinars only. Mean wages were $27.83 per manhour in 2009. As for skilled and experienced non-Kuwaiti (Engineers, Doctors, and Managers) the average monthly salary is hiked up tremendously, to an average of $10,000+ a month excluding living and other benefits. Please, also keep in mind that Kuwait is a tax free country so all the above figures reflect actual take home numbers.

Kuwait is a small country with massive oil reserves, whose economy has been traditionally dominated by the state and its oil industry. During the 1970s, Kuwait benefited from the dramatic rise in oil prices, which Kuwait actively promoted through its membership in the Organization of Petroleum Exporting Countries (OPEC). The economy suffered from the triple shock of a 1982 securities market crash, the mid-1980s drop in oil prices, and the 1990 Iraqi invasion and occupation. The Kuwaiti Government-in-exile depended upon its $100 billion in overseas investments during the Iraqi occupation in order to help pay for the reconstruction. Thus, by 1993, this balance was cut to less than half of its pre-invasion level. The wealth of Kuwait is based primarily on oil and capital reserves, and the Iraqi occupation severely damaged both.

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