Anticipated Continuous Expansion for Kuwait and Gulf Cooperative Council Economies in the Years 2025-2026, According to AMF Projections
Gulf Economies Poised for Growth, According to Arab Monetary Fund Report
The Arab Monetary Fund (AMF) has published its 21st edition of the "Arab Economic Outlook," highlighting key drivers for economic growth in Kuwait and the broader Gulf region. The report suggests that structural and policy reforms aimed at diversification and improvement in the investment climate are the primary factors contributing to a positive growth outlook.
According to the AMF, the key drivers for economic growth in Kuwait and the Gulf region are ongoing economic reforms, income diversification efforts, and improvements in the financing and investment environment. These factors are expected to lead to a growth rate increase from 2.2% in 2024 to 3.8% in 2025 and 4.3% in 2026 across Arab economies, including Kuwait and the Gulf Cooperation Council (GCC) countries.
The report emphasizes on economic reforms that likely enhance business environments, regulatory frameworks, and public sector efficiency. Income diversification efforts are aimed at reducing reliance on oil revenues by expanding sectors such as finance, industry, and services. Enhancements in financing and investment climates facilitate greater private sector engagement and capital inflows.
Policymakers are encouraged to focus on fiscal sustainability, diversify revenue sources, and improve spending efficiency to maintain steady growth and economic stability. Inflation rates are also expected to decline significantly, which supports a healthier environment for growth and investment in the region.
Kuwait's economy is expected to rebound from a 2.9% contraction in 2024. The growth rate for Arab economies as a whole is expected to improve from 2.2% in 2024 to 3.8% in 2025 and 4.3% in 2026. Across the Gulf region, AMF forecasts economic growth to rise from 2.2% in 2024 to 4% in 2025 and 4.4% in 2026.
Inflation for Arab economies is projected to decline from 31.9% in 2024 to 20.8% in 2025 and 14.2% in 2026, with most countries experiencing more moderate rates. Global import price changes, including U.S. tariffs, could influence inflation and local production costs, according to the AMF report. Inflation in Kuwait is expected to stabilize at moderate levels, around 2.6% in 2025 and 2026, down from 2.9% in 2024.
The report predicts Kuwait's economy to grow by 2.3% in 2025 and 2.9% in 2026. However, it does not mention any updates on economic diversification and foreign investment beyond their identification as key drivers for Kuwait's economy.
Despite the positive outlook, the report does not discuss any specific infrastructure projects that align with broader diversification goals in the Gulf region or any potential challenges or risks to the projected growth and inflation rates in the Arab economies.
[1]: Arab Monetary Fund's "Arab Economic Outlook" Report [2]: AMF Press Release on the 21st Edition of the "Arab Economic Outlook"
- The Arab Monetary Fund's report on the Arab Economic Outlook highlights that ongoing economic reforms, income diversification efforts, and improvements in the financing and investment environment are key drivers for economic growth in the Gulf region's business sector.
- Policymakers in the Gulf region's economies, such as Kuwait, are encouraged to focus on fiscal sustainability, diversify revenue sources, and improve spending efficiency to maintain steady growth and economic stability, especially in the finance and business sectors.
