Kuwait’s strong financial assets, estimated at 418 percent of GDP, support ‘A+’ sovereign rating, stable outlook: Report

The report highlighted ongoing structural and financial reforms in the country

In its latest report, global rating agency Standard & Poor’s (S&P) has affirmed Kuwait’s ‘A+’ sovereign rating with a stable outlook. This strong rating is largely attributed to the substantial financial assets of the Kuwaiti government, which are projected to reach about 418 percent of the country’s gross domestic product (GDP) in 2024.

The agency highlighted ongoing structural and financial reforms in Kuwait. However, S&P also noted that Kuwait’s economy remains highly dependent on the oil sector, leaving it vulnerable to volatility in global oil prices. S&P forecasts a 2.3 percent contraction in Kuwait’s real GDP in 2024, followed by an average growth of 2.4 percent over 2025-2027, assuming a slight easing of OPEC oil production curbs.

The new vision to transform Kuwait into a financial center

The report highlights Kuwait’s plans to accelerate major government investment projects, with a focus on public-private partnerships and high-impact initiatives driven by the vision of New Kuwait 2035. This national strategy aims to transform Kuwait into a regional hub and international financial and trade, making it more attractive to investors.

Read more: Kuwait’s non-oil private sector sees strongest growth in nearly 4 years, PMI hits 52.4 in May: Report

Substantial financial assets to ensure stability

S&P’s stable outlook reflects the assumption that Kuwait’s core financial and external balances will remain stable over the forecast period, supported by the government’s projected growth in financial assets to reach 447 percent of GDP between 2024 and 2027. These important assets are expected to mitigate the economic risks associated with the country’s heavy dependence on the oil sector and possible fluctuations in oil prices.

The increase in potential valuations depends on structural reforms

The rating agency noted that a possible upgrade in Kuwait’s sovereign credit rating could be contingent on the successful implementation of a comprehensive package of structural reforms, such as diversifying the economy away from the hydrocarbon sector and increasing capacity to its productive sector, leading to stronger real GDP growth prospects. .

In addition, S&P noted that a downgrade of Kuwait’s rating could be triggered by a significant increase in fiscal imbalances, potentially due to weaker oil prices or a lack of fiscal reforms, if the government remains without a comprehensive fiscal financing agreement.

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