Fitch Affirms Kuwait at 'AA-', Outlook 'Stable'

Fitch Ratings has affirmed Kuwait's Long-Term Issuer Default Ratings (IDRs) at 'AA-' with a Stable Outlook, citing the nation's exceptionally strong fiscal and external balance sheets. Kuwait's sovereign net foreign assets relative to GDP are the highest among all Fitch-rated sovereigns.

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We expect some degree of normalization in the near term, but uncertainty is high and severe disruptions remain possible.

However, the rating agency noted constraints including weaker governance compared to peers, a heavy dependence on oil, and a costly welfare system coupled with a large public sector. These factors pose potential long-term fiscal pressures, despite ongoing spending rationalization efforts.

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We expect Kuwait's crude oil production to average 2m b/d in the fiscal year ending March 2027 (FY26), before recovering in FY27 ... we believe Kuwait has the capacity to restore production quickly once transit conditions normalize.

Fitch anticipates that the Middle East conflict will continue to impact Kuwait's oil exports via the Strait of Hormuz. While some normalization is expected in the near term, significant disruptions remain a possibility. The agency projects Kuwait's crude oil production to average 2 million barrels per day in the fiscal year ending March 2027 (FY26), with a recovery to 1.65 million b/d in June and approximately 2 million b/d in July. Fitch expects Kuwait has the capacity to restore production quickly once transit conditions normalize.

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We expect Kuwait's average oil price at USD81.4/b for FY26, up 21% from FY25, and to fall in FY27.

The agency forecasts Kuwait's average oil price at $81.4 per barrel for FY26, a 21% increase from FY25, with an expected decline in FY27. Fitch anticipates the Iran conflict will weigh on economic activity primarily through reduced oil production. Non-oil GDP is also expected to weaken but remain positive, supported by public infrastructure spending, public sector employment, and central bank support for the banking sector. Inflation is projected to rise marginally in 2026 before easing in 2027.

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The Iran war “to weigh on economic activity mainly driven by the decline in oil production. Non-oil GDP will also weaken but remain in positive territory, supported by public infrastructure spending, public sector employment and the central bank's support for the banking sector.”