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Kuwait vs. Iraq

Economy

KuwaitIraq
Economy - overviewKuwait has a geographically small, but wealthy, relatively open economy with crude oil reserves of about 102 billion barrels - more than 6% of world reserves. Kuwaiti officials plan to increase production to 4 million barrels of oil equivalent per day by 2020. Petroleum accounts for over half of GDP, 92% of export revenues, and 90% of government income.

In 2015, Kuwait, for the first time in 15 years, realized a budget deficit after decades of high oil prices; in 2016, the deficit grew to 16.5% of GDP. Kuwaiti authorities announced cuts to fuel subsidies in August 2016, provoking outrage among the public and National Assembly, and the Amir dissolved the government for the seventh time in ten years. Despite Kuwait’s dependence on oil, the government has cushioned itself against the impact of lower oil prices, by saving annually at least 10% of government revenue in the Fund for Future Generations.

Kuwait has failed to diversify its economy or bolster the private sector, because of a poor business climate, a large public sector that employs about 76% of citizens, and an acrimonious relationship between the National Assembly and the executive branch that has stymied most economic reforms. The Kuwaiti Government has made little progress on its long-term economic development plan first passed in 2010. While the government planned to spend up to $104 billion over four years to diversify the economy, attract more investment, and boost private sector participation in the economy, many of the projects did not materialize because of an uncertain political situation or delays in awarding contracts.
Iraq's GDP grew by more than 10% in 2016, the best performance in the past decade, because of rising oil prices, which are a significant driver of Iraqi GDP. During 2016, security and financial stability throughout Iraq began to improve as Iraqi Security Forces made gains against the ongoing insurgency and oil prices slowly rose. The Iraqi Government entered into a Stand-By Arrangement (SBA) with the IMF in July 2016, which helped stabilize its finances by encouraging improved fiscal management, needed economic reform, and expenditure reduction. Iraq passed its first SBA review in December 2016, and additional progress on the program is critical to its long-term fiscal health. Diversification efforts – a key component to Iraq’s long-term economic development – require a strengthened investment climate to bolster private-sector engagement. Sustained improvements in the overall standard of living depend heavily on global oil prices, the central government passing major policy reforms, and progress in the conflict with ISIL.

Iraq's largely state-run economy is dominated by the oil sector, which provides more than 90% of government revenue and 80% of foreign exchange earnings. Oil exports in 2016 averaged 3.3 million barrels per day from southern Iraq, up from 2015. Moreover, the slow recovery of global oil prices improved export revenues throughout 2016, although monthly revenue remained below 2015 levels. Iraq's contracts with major oil companies have the potential to further expand oil exports and revenues, but Iraq will need to make significant upgrades to its oil processing, pipeline, and export infrastructure to enable these deals to reach their economic potential.

Iraqi oil exports from northern fields are hampered by fundamental disagreements between the Iraqi Government and autonomous Kurdistan Regional Government (KRG) in Iraq’s Kurdistan region (IKR) on the roles of federal and regional authorities in the development and export of natural resources. In 2007, the KRG passed an oil law to develop IKR oil and gas reserves independent of the federal government. The KRG has signed about 50 contracts with foreign energy companies to develop its reserves, some of which lie in territories whose status is in dispute between Baghdad and Erbil. Some of the companies have left or returned blocks, citing lack of commercial prospects. In 2014, the KRG began exporting its oil unilaterally through its own pipeline to Turkey, which Baghdad claims is illegal. In the absence of a national hydrocarbons law, the two sides have entered into four provisional oil- and revenue-sharing deals since 2009, all of which collapsed. In September 2016, the two sides began implementing a fifth ad hoc agreement to split oil exports from Baghdad-controlled fields in Kirkuk.

Iraq is making slow progress enacting laws and developing the institutions needed to implement economic policy, and political reforms are still needed to assuage investors' concerns regarding the uncertain business climate. The Government of Iraq is eager to attract additional foreign direct investment, but it faces a number of obstacles, including a tenuous political system and concerns about security and societal stability. Rampant corruption, outdated infrastructure, insufficient essential services, skilled labor shortages, and antiquated commercial laws stifle investment and continue to constrain growth of private, nonoil sectors. Under the Iraqi constitution, some competencies relevant to the overall investment climate are either shared by the federal government and the regions or are devolved entirely to local governments. Investment in the IKR operates within the framework of the Kurdistan Region Investment Law (Law 4 of 2006) and the Kurdistan Board of Investment, which is designed to provide incentives to help economic development in areas under the authority of the KRG.

Inflation has remained under control since 2006. However, Iraqi leaders remain hard-pressed to translate macroeconomic gains into an improved standard of living for the Iraqi populace. Unemployment remains a problem throughout the country despite a bloated public sector. Encouraging private enterprise through deregulation would make it easier for Iraqi citizens and foreign investors to start new businesses. Rooting out corruption and implementing reforms - such as restructuring banks and developing the private sector - would be important steps in this direction.
GDP (purchasing power parity)$301.1 billion (2016 est.)
$293.7 billion (2015 est.)
$290.4 billion (2014 est.)
note: data are in 2016 dollars
$596.7 billion (2016 est.)
$541 billion (2015 est.)
$554.1 billion (2014 est.)
note: data are in 2016 dollars
GDP - real growth rate2.5% (2016 est.)
1.1% (2015 est.)
0.6% (2014 est.)
10.3% (2016 est.)
-2.4% (2015 est.)
-0.4% (2014 est.)
GDP - per capita (PPP)$71,300 (2016 est.)
$71,500 (2015 est.)
$72,600 (2014 est.)
note: data are in 2016 dollars
$16,500 (2016 est.)
$15,400 (2015 est.)
$16,200 (2014 est.)
note: data are in 2016 dollars
GDP - composition by sectoragriculture: 0.4%
industry: 59.6%
services: 40% (2016 est.)
agriculture: 5.7%
industry: 45.1%
services: 49.3% (2016 est.)
Population below poverty lineNA%
23% (2014 est.)
Household income or consumption by percentage sharelowest 10%: NA%
highest 10%: NA%
lowest 10%: 3.6%
highest 10%: 25.7% (2007 est.)
Inflation rate (consumer prices)3.3% (2016 est.)
3.3% (2015 est.)
2.4% (2016 est.)
1.4% (2015 est.)
Labor force2.546 million
note: non-Kuwaitis represent about 60% of the labor force (2016 est.)
8.9 million (2010 est.)
Labor force - by occupationagriculture: NA%
industry: NA%
services: NA%
agriculture: 21.6%
industry: 18.7%
services: 59.8% (2008 est.)
Unemployment rate3% (2016 est.)
3% (2015 est.)
16% (2012 est.)
15% (2010 est.)
Budgetrevenues: $47.14 billion
expenditures: $65.32 billion (2016 est.)
revenues: $52.43 billion
expenditures: $77.87 billion (2016 est.)
Industriespetroleum, petrochemicals, cement, shipbuilding and repair, water desalination, food processing, construction materials
petroleum, chemicals, textiles, leather, construction materials, food processing, fertilizer, metal fabrication/processing
Industrial production growth rate1.6% (2016 est.)
7% (2016 est.)
Agriculture - productsfish
wheat, barley, rice, vegetables, dates, cotton; cattle, sheep, poultry
Exports$43.84 billion (2016 est.)
$55.32 billion (2015 est.)
$44.67 billion (2016 est.)
$54.67 billion (2015 est.)
Exports - commoditiesoil and refined products, fertilizers
crude oil 99%, crude materials excluding fuels, food, live animals
Exports - partnersSouth Korea 14.8%, China 12.3%, Japan 10.6%, India 9.8%, US 7.7%, Pakistan 6%, Singapore 4.4% (2015)
China 22.8%, India 20.4%, South Korea 11.3%, US 7.8%, Italy 6.7%, Greece 6.1% (2015)
Imports$28.32 billion (2016 est.)
$27.34 billion (2015 est.)
$43.27 billion (2016 est.)
$43.84 billion (2015 est.)
Imports - commoditiesfood, construction materials, vehicles and parts, clothing
food, medicine, manufactures
Imports - partnersChina 13.2%, US 9.6%, Saudi Arabia 7.7%, Japan 6.5%, Germany 5.1%, France 4.3%, India 4.3% (2015)
Turkey 20.3%, Syria 19.2%, China 18.8%, US 4.7%, Russia 4.3% (2015)
Debt - external$41.3 billion (31 December 2016 est.)
$37.23 billion (31 December 2015 est.)
$68.01 billion (31 December 2016 est.)
$60.28 billion (31 December 2015 est.)
Exchange ratesKuwaiti dinars (KD) per US dollar -
0.3024 (2016 est.)
0.3009 (2015 est.)
0.3009 (2014 est.)
0.2845 (2013 est.)
0.28 (2012 est.)
Iraqi dinars (IQD) per US dollar -
1,179.3 (2016 est.)
1,167.63 (2015 est.)
1,167.63 (2014 est.)
1,213.72 (2013 est.)
1,166.17 (2012 est.)
Fiscal year1 April - 31 March
calendar year
Public debt23.1% of GDP (2016 est.)
11.2% of GDP (2015 est.)
79% of GDP (2016 est.)
63.9% of GDP (2015 est.)
Reserves of foreign exchange and gold$28.72 billion (31 December 2016 est.)
$30.96 billion (31 December 2015 est.)
$44.15 billion (31 December 2016 est.)
$54.06 billion (31 December 2015 est.)
Current Account Balance$2.977 billion (2016 est.)
$5.974 billion (2015 est.)
-$12.2 billion (2016 est.)
-$11.63 billion (2015 est.)
GDP (official exchange rate)$110.5 billion (2016 est.)
$173 billion (2016 est.)
Stock of direct foreign investment - at home$12.39 billion (31 December 2016 est.)
$14.6 billion (31 December 2015 est.)
$26.63 billion (2015 est.)
$23.16 billion (2014 est.)
Stock of direct foreign investment - abroad$73.65 billion (31 December 2016 est.)
$31.58 billion (31 December 2015 est.)
$2.109 billion (2015 est.)
$1.956 billion (2014 est.)
Market value of publicly traded shares$81.78 billion (31 December 2016 est.)
$83.13 billion (31 December 2015 est.)
$99.77 billion (31 December 2014 est.)
$4 billion (9 December 2011)
$2.6 billion (31 July 2010)
$2 billion (31 July 2009 est.)
Central bank discount rate2.5% (31 December 2016)
1.25% (31 December 2010)
6% (2016)
6% (2015)
Commercial bank prime lending rate4.6% (31 December 2016 est.)
4.3% (31 December 2015 est.)
4.5% (31 December 2016 est.)
6% (31 December 2015 est.)
Stock of domestic credit$102.9 billion (31 December 2016 est.)
$96.96 billion (31 December 2015 est.)
$3.191 million (31 December 2016 est.)
$1.773 million (31 December 2015 est.)
Stock of narrow money$31.54 billion (31 December 2016 est.)
$30.95 billion (31 December 2015 est.)
$54.53 billion (31 December 2016 est.)
$55.36 billion (31 December 2015 est.)
Stock of broad money$117.1 billion (31 December 2016 est.)
$114.8 billion (31 December 2015 est.)
$74.61 billion (30 August 2016 est.)
$80.83 billion (31 December 2015 est.)
Taxes and other revenues42.7% of GDP (2016 est.)
30.3% of GDP (2016 est.)
Budget surplus (+) or deficit (-)-16.5% of GDP (2016 est.)
-14.7% of GDP (2016 est.)
GDP - composition, by end usehousehold consumption: 47.6%
government consumption: 27.2%
investment in fixed capital: 29.5%
investment in inventories: 0%
exports of goods and services: 47.8%
imports of goods and services: -52.1% (2016 est.)
household consumption: 50.4%
government consumption: 18.8%
investment in fixed capital: 23.5%
investment in inventories: -4.5%
exports of goods and services: 39.7%
imports of goods and services: -27.9% (2016 est.)
Gross national saving27.2% of GDP (2016 est.)
31.6% of GDP (2015 est.)
50.2% of GDP (2014 est.)
10.6% of GDP (2016 est.)
18.2% of GDP (2015 est.)
28.1% of GDP (2014 est.)

Source: CIA Factbook