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Kuwait saw its once-lucrative oil and gas sector shrink by 1.7 percent—in real terms—in 2015 for the third year in a row, according to preliminary figures prepared by the Central Statistical Bureau (CSB).
The CSB’s report did not attribute the decline in the oil and gas sector to any production cuts, but rather to a 19 percent reduction in refining activity over the course of the year. The refining decline is not completely understood, with independent figures showing that refining output grew by three percent in 2015.
The CSB also shows that Kuwait’s overall growth in Gross Domestic Product increased by 1.8 percent in 2015, up from 0.5 percent growth in 2014. Analysts at the bank said in the report that they expect the figure to be adjusted upwards once final figures are released in the near future.
Non-oil GDP growth slowed to 1.3 percent in 2015, but stronger levels of foreign direct investment have made up for the slowdown. The agency expects non-oil related activity to maintain a growth rate of four to five percent this year and the next.
Over the next three to four years, Kuwaitis will experience the construction of almost $100 billion in development projects in the country as its leaders diversify the monolithic energy economy.
The Gulf state’s government has begun reducing the generous energy subsidies it provides to its citizens and residents. Kuwaiti energy customers will see an up to 80 percent rise in fuel prices on 1 September, according to an announcement made by the national cabinet earlier this month.
Related: Why Investors Shouldn’t Believe The OPEC Rumors
Kuwait represents the last country in the Gulf Cooperation Council to increase the price of oil, though the nation had liberalized its energy-pricing model in January 2015, allowing rates to be changed on a monthly basis.
Other GCC countries, including Bahrain, Oman, Qatar, Saudi Arabia and the United Arab Emirates, had liberalized their pricing model in mid-2014 due to the sharp dip in oil revenues since the price crash that year.
By Zainab Calcuttawala for Oilprice.com
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Zainab Calcuttawala is an American journalist based in Morocco. She completed her undergraduate coursework at the University of Texas at Austin (Hook’em) and reports on…