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Originally published:
Jun-16-2004
Legal System
Kuwait is a nominal constitutional monarchy with a civil law system with Islamic law significant in personal matters. The country has not accepted compulsory ICJ jurisdiction.
Economy
Currency: Kuwaiti dinar (KD)
Inflation: 2% (2004 forecast), 1.6% (2003 forecast), 1.4% (2002 est.), 1.7% (2001), 1.8% (2000), 3% (1999)
Real GDP Growth Rate: -4.4% (2004 forecast), 12.5% (2003 forecast), -4.1% (2002 est.), -1% (2001), -7.5% (2000), -4.9% (1999)
GDP Per Capita: $14,234 (2002)
Leading Markets (2002): Japan 24.4%, South Korea 12.9%, US 11.9%, Singapore 10.1%, Taiwan 7%, Netherlands 4.5%, Pakistan 4.4%
Leading Suppliers (2002): US 13.1%, Japan 11.1%, Germany 9.7%, Saudi Arabia 6.6%, UK 6%, Italy 5.4%, France 5.2%
KD per US dollar: .2950 (6/16/04)
Top Industries: petroleum, petrochemicals, desalination, food processing, construction material
General Economic Situation
Kuwait is a small, rich, relatively open economy with proved crude oil reserves of about 98 billion barrels - 10% of world reserves. Petroleum accounts for nearly half of GDP, 95% of export revenues, and 80% of government income. Only Saudi Arabia and Iraq have larger proven reserves. Kuwait's climate limits agricultural development. Consequently, with the exception of fish, it depends almost wholly on food imports. About 75% of potable water must be distilled or imported.
The country has a solid financial position, with comfortable external and fiscal surplus levels. Foreign debt has been moderate. The banking system is sound and well supervised.
Business Climate
Kuwait is an attractive business venue because there are: opportunities for major contracts, particularly in the oil industry; requirements for imported goods, labor and technical expertise; excellent communication and sophisticated trade infrastructure; advantages in the extensive use of English as the second language of business. Kuwait is currently concentrating on several economic goals aimed at decreasing dependence on oil revenues, including encouraging the private sector to assume responsibility for economic development and the privatization of certain government operations.
Credit and Collections
- Collection Experience: Fair-Good
- Exchange Delays: 5 months
- Preferred Credit Terms: Unconfirmed Letter of Credit
- Minimum Credit Terms: Unconfirmed Letter of Credit
Risk Assessment
The 1990 Iraq war actually ended up spurring Kuwait’s economy due to increased oil production and high barrel prices. The presence of foreign troops also spurred the non-oil sector temporarily. After those exceptional events, the economy could fall back into recession in 2004 amid the expected decline of oil production and sagging domestic demand. Still, Kuwait’s financial situation gives little cause for concern considering its modest foreign debt burden and foreign currency investments.
Country Risk Rating: (A2) Default probability is still weak even in the case when one country's political and economic environment or the payment record of companies are not as good as A1-rated countries
Sources for further information on doing business in Kuwait
Doing Business in Kuwait: Country Commercial Guide, U.S. Department of Commerce
Kuwait Law: Explanation of the legal aspects of doing business in Kuwait.
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This information is provided by ABC-Amega Inc. Providing international receivable management and debt collection services for exporters to more than 200 countries including Kuwait. For further information, contact info@abc-amega.com.
This report represents a compilation of information from a wide variety of reputable sources including: the U.S. Department of State, the U.S. Commercial Service, CIA World Factbook and Coface North America Country Risk Assessment.
Risk Assessment information: Coface and Owens Online.
Information on credit terms and the probability of prompt payment are provided, with permission, from Overseas Press and Consultants (OP&C) as published in IOMA's Report on "Managing Credit, Receivables & Collections," May 2004.
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