The acceleration of the vaccine rollout offers optimism for economic activity normalization; however, the government’s target of vaccinating 80% of the population by September 2021 could be challenged by vaccine shipment delays and vaccine hesitancy, which could delay easing of restrictions. FrontierView’s most recent Kuwait Market Review explores several key market developments and Kuwait economic policy:
- Consumer spending patterns will normalize more into H2 2021
- Oil price recovery will provide some insurance to government spending plans
- Political dynamics complicate fiscal policy
Businesses face significant financial stress due to insufficient fiscal stimulus
Government spending recovery will provide support for headline growth, but businesses should monitor the risk of tight fiscal policy amid heightened deficit financing challenges. Business growth in the retail and transportation sectors will be challenged by extended restrictions before inevitably improving. The construction, ICT, and healthcare sectors will benefit from government spending normalization, although potential fiscal consolidation threatens their recovery in 2021.
The government’s vaccination target could be achieved, but with some risks
We can envision a scenario where herd immunity is achieved in Kuwait by the end of this year. However, the risk of vaccine shipment delays could extend the vaccine rollout well into next year. Expect a gradual ease of restrictions as more priority groups are vaccinated toward the middle of this year.
Read our latest Kuwait Market Review to discover steps your business can take to tackle Kuwait’s economic policy in 2021.
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