The IMF says the 6 per cent cut in hydrocarbons output following the production cap agreed by Opec and non-Opec producers will bring Kuwait’s overall real GDP growth down by about 2.5 per cent in 2017.

More positively, the Washington-based fund says non-oil growth has picked up modestly over the past two years, and inflation has moderated. “After coming to a standstill in 2015, [Kuwait's] real non-hydrocarbons GDP growth has recovered and is set to reach 2.5 per cent this year, driven by improved confidence,” said the IMF in a statement, after concluding its Article IV report on 15 November.

Overall real GDP growth is expected to pick up over the medium term. The fund says it will be driven by accelerated project implementation under Kuwait's five-year development plan as well as improved confidence. Non-oil growth is projected to increase gradually to about 4 per cent.

Inflation is on track to reach a multi-year low of 1.75 per cent in 2017, due to a decline in housing rents and cheaper food prices. Inflation is expected to rise to 2.5 per cent next year and to peak at 3.75 per cent in 2019 with the introduction of the new taxes. It is then expected to stabilise below 3 per cent.