AHMAD ALSADHAN WRITES –Kuwait, a small oil producing country situated in the north of the Arabian Gulf, has been heavily impacted economically by the pandemic. The impact of the Covid-19 pandemic has resulted in the worst economic crisis since the 2008 Financial Crisis.
While the world almost stopped operating as lockdowns were imposed globally and disruptions hit lives and businesses, Kuwait saw oil prices drop to record lows due to the drop in demand and the increase in supply. Oil and gas are the main industries in Kuwait’s economy. And so, Kuwait’s GDP declined by approximately 9%, largely due to the decrease in demand for numerous oil products. Oil makes up more than 75% of its economy, so now Kuwait faces a huge deficit.
While the spike in Covid-19 cases made health officials enforce lockdowns that would bring down the number of cases and reduce social interactions, the negative effects of the lockdowns must also be considered. All businesses in Kuwait were shut down, workers were laid off, and losses kept increasing. Kuwait went through one of the longest lockdowns in the world, which lasted 161 days.
The younger generation was the most affected. A big percentage are entrepreneurs that don’t rely on government jobs. Most of them had loans that they are now struggling to repay.
While the pandemic’s impact on the economy showed that worldwide dependency on oil by itself is a dangerous idea, Kuwait, too, has had an awakening: It needs to diversify its economy so that if there is a future crisis the economy will not be so heavily impacted.
Diversifying Kuwait’s economy will take time, but for now Kuwait needs to invest more in local companies and must increase its manufacturing of local products. Exporting those local products will increase Kuwait’s independence. And the exportation can be done through the country’s own ports, which are already used to export oil and so can be upgraded to host both manufactured goods and international trade. Kuwait’s prime location will play a big role in its evolution as a hub of international trade.