Kuwait is situated in the northwestern corner of the Arabian Peninsula, at the head of the Persian Gulf. Bordered to the north and west by Iraq, to the south and west by Saudi Arabia and to the east by the Persian Gulf, Kuwait occupies a strategic position in this vital region. Kuwait is a member of the six-nation Gulf Cooperation Council (GCC). About one-third of Kuwait’s 3.63 million residents are Kuwaiti nationals. The other 2.4 million residents hail from more than 80 countries. Kuwait’s economy is dominated by the oil industry and government sector. The country’s crude oil reserves are estimated at nearly 105 billion barrels, approximately 9% of the world’s reserves, and account for nearly half of Kuwait’s GDP, 95% of export revenues, and 90% of government income. Kuwait’s economy has benefited from the sharp rise of oil prices in recent years. Given that oil is the country’s main natural resource, Kuwait’s industries are dominated by oil refining and downstream petrochemical processing. The non-petroleum related manufacturing and agriculture sectors are limited, consisting of a switch gear manufacturer for power sub stations and factories for building materials, furniture, and food packaging.
The 2003 ouster of Saddam Hussein in Iraq stimulated local confidence in Kuwait’s economy and security situation. In 2010, Kuwait’s parliament passed a five-year $104 billion development plan that strives to update Kuwait’s infrastructure and diversify the economy away from oil. Unlike Kuwait’s Gulf neighbors, government-funded major projects here move slowly. Kuwait traditionally under estimates budget revenues and overestimates expenditures, and is likely to achieve a budget surplus for the 13th straight year.
Kuwait imports most of its capital equipment, processed foods manufacturing equipment, and consumer goods. Two-way trade is limited to few international partners. A high percentage of imports originate from the U.S., Germany and Japan, while over 40% of Kuwait’s export earnings is attributable to Japan, South Korea, India, and the U.S. The U.S. remains a leading and strategic partner of Kuwait. With high oil prices and one of the highest per capita income in the GCC at over $39,000 per year as of 2010. Kuwait’s imports from the U.S. in 2011 were valued at $2.73 billion, a slight decrease compared to 2010 at $2.77 billion. As Kuwaitis frequently travel to the U.S. (and have studied in the U.S.), Americans and their products receive one of the warmest welcomes in the Middle East in this small economic powerhouse. Although Kuwaitis are extremely price-conscious, they are also avid consumers. While Chinese and Indian goods increasingly dominate low-end imports, U.S. exports are competitive in Kuwait.
Kuwait’s economy grew significantly in early 2008 as a result of record high crude oil prices, but declined in 2009 due to the global financial crisis. 2010 nominal GDP was KD 38 billion (USD 138 billion). Kuwait's current oil production capacity is estimated at 3.3 million barrels per day. Kuwait hopes to increase its production capacity to 4 million barrels per day by 2020. In order to reach its 2020 goal, Kuwait estimates that it will spend around $90 billion within the next five years on upgrading downstream facilities and for upstream oil development.
Transportation equipment (including automobiles and automotive parts) account for approximately 1/3 of the non-military U.S. exports to Kuwait in 2011. Oil and gas field equipment, telecommunications and IT equipment, electric generator sets, medical equipment, building materials and supplies, and electronics were also leading export sectors for U.S. firms.