IMF Staff Country Reports

This Selected Issues paper emphasizes the need for accelerating reforms in governance, regulatory quality, external sector, labor market, and credit market to drive non-oil growth and bolster economic resilience in Kuwait. Kuwait's national development efforts, driven by Kuwait Vision 2035 and successive plans from 2010 to 2020, have helped narrow structural gaps, setting a foundation for economic diversification and resilience. The empirical results suggest reforms aimed at improving the regulatory quality and governance yield the highest non-oil output gains, with increasing magnitudes over the medium term. The findings suggest that adopting a strategic sequencing of reforms that prioritizes first-generation reforms, including improving governance and regulatory quality and enhance trade facilitation to open up the external sector, followed by labor and credit markets reforms, can amplify initial non-oil growth dividends. Closing the gaps in first-generation reforms presents Kuwait with substantial low hanging fruit, setting the groundwork for impactful labor market reforms.