Kuwait’s non-oil gross domestic product (GDP) growth will continue to increase into 2014 following on from its recovery in 2012, according to the Washington-headquartered IMF in its latest Article IV Consultation.

Kuwait’s non-oil GDP growth is forecast to rise to 3 per cent in 2013, from 2.2 per cent in 2012, and is projected to increase further to 4.4 per cent in 2014. The 2.2 per cent growth in 2012 marked a significant recovery from the 0.9 per cent growth that the non-oil sector recorded in 2011 and the three years of shrinkage that preceded it. The IMF forecasts that non-oil GDP growth will rise further to 5 per cent in the medium term.

The growth in Kuwait’s non-oil sector will be welcomed in the oil exporter, with the country’s overall  real GDP forecasted to grow by just 0.8 per cent in 2013, a sharp slowdown from 6.2 per cent in 2013. The lower growth is mainly due to a 2 per cent fall in oil GDP.

The decline in oil GDP is partly due to a 0.5 per cent reduction in oil production, from 2.98 million barrels a day (b/d) to 2.93 millions b/d, and a $5.4bn reduction in total oil exports.

In its Article IV report, the IMF recommends that to achieve the projected medium-term non-oil GDP growth, the government and parliament “reach an enduring political agreement” to ensure the targets set out in the country’s 2011-14 Development Plan can be achieved. Despite boasting large proven oil reserves, Kuwait’s economic performance has lagged behind neighbouring GCC states in recent years due to delays in the implementation of key economic reforms and infrastructure projects.

The delays have largely been due to protracted political schisms. In August, Kuwait’s Emir Sheikh Sabah al-Ahmad al-Sabah inaugurated the fifth cabinet since his appointment in November 2011, and the 12th new cabinet since 2006.

The IMF stipulates in its consultation that the long-term objectives of Kuwait’s governments should aim toward diversification and job creation in the private sector. Public sector wages currently form one of the biggest areas of government spending in Kuwait, accounting for KD3.1bn of the KD10.6bn spent in the 11 months to February 2013.