Economy

For the size of the country, Kuwait has a very rich and relatively open economy with proven crude oil reserves of 96 billion barrels (2006 figures), estimated to be 10% of the world's reserves. Petroleum accounts for nearly half of GDP, 95% of export revenues and 80% of government income. 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 expenses of the Iraqi invasion and post-war reconstruction placed a heavy economic burden on the country, but by the mid-1990s Kuwait had resumed its pre-invasion prosperity. Gross domestic product (PPP) for 2006 was US$55.91 billion, giving Kuwait a per-capita GDP of US$23,100. The labour force totals 1,136,000 people, only about one-fifth of whom are Kuwaiti citizens.

Agriculture

Agriculture is limited by the lack of water and arable land. The government has experimented in growing food through hydroponics and carefully managed farms. However, most of the soil that was suitable for farming in south central Kuwait was destroyed when Iraqi troops set fire to oil wells in the area and created vast 'oil lakes'. Fish and shrimp are plentiful in territorial waters, and large-scale commercial fishing has been undertaken locally and in the Indian Ocean.

Industry

Industry in Kuwait consists of several large export-oriented petrochemical units, oil refineries, and a range of small manufacturers. It also includes large water desalinization, ammonia, desulphurization, fertilizer, brick, block and cement plants. During the invasion, the Iraqis looted nearly all movable items of worth, especially high-technology items and small machinery. Much of this has been replaced with newer equipment.

Oil

Since the government owns the oil industry, it controls most of the country's economy; in all, about 75 percent of the GDP. Kuwait's oil exports vary depending on internal needs - almost all of Kuwait's energy is derived from oil - and on international demand and prices and production quotas fixed by the Organization of Petroleum Exporting Countries (OPEC), of which Kuwait is a member. OPEC's quotas, however, are difficult to enforce, and Kuwait and other countries have been accused of violating them.

Kuwait has about 96 billion barrels of recoverable oil reserves. Estimated capacity, before the war, was about 2.4 million barrels (380,000 cu m) per day. During the Iraqi occupation, Kuwait's oil-producing capacity was reduced to practically nothing. However, tremendous recovery and improvements have been made. Oil production was 1.5 million barrels (240,000 cu m) per day by the end of 1992, and pre-war capacity was restored in 1993. Kuwait's production capacity in 2006 is estimated to be 2.4 million barrels per day.

Trade, Finance and Aid

The Kuwaiti dinar is a strong currency pegged to a basket of currencies in which the US dollar has the most weight. Kuwait ordinarily runs a balance-of-payments surplus.

Government revenues are dependent on oil revenues. Kuwait's fiscal surplus in 2000 was some 15% of GDP, while it reversed to a deficit of more that 2% of GDP in 2001 on sliding oil prices.

The government's two reserve funds: the Fund for Future Generations and the General Reserve Fund, which totalled nearly $100 billion prior to the invasion in 1990, were the primary source of capital for the Kuwaiti Government during the war. While these funds were depleted to US$40-$50 billion after the war, they currently are estimated around US$208 billion. The bulk of this reserve is invested in the United States, Germany, the United Kingdom, France, Japan and Southeast Asia. In order of importance, foreign assets are believed to be invested in stocks and bonds, fixed yield instruments (mostly short term), and real estate. Kuwait follows a generally conservative investment policy.

Kuwait has been a major source of foreign economic assistance to other states through the Kuwait Fund for Arab Economic Development, an autonomous state institution created in 1961 on the pattern of Western and international development agencies. In 1974, the fund's lending mandate was expanded to include all - not just Arab - developing countries.

Over the years aid was provided to Egypt, Syria, and Jordan, as well as the Palestine Liberation Organization. During the Iran-Iraq war, significant Kuwaiti aid was given to the Iraqis. The Kuwait fund issued loans and technical assistance grants totalling over US$520 million during its fiscal year ending 30 June 2000.

The stock market capitalisation of listed companies in Kuwait was valued at US$130,080 million in 2005 by the World Bank.