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Economy

Kuwait's economy contracted by 9.9 percent in 2020 amid sharp drop in oil prices

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Kuwait's gross domestic product contracted 9.9 percent in 2020, compared with growth of 0.4 percent in 2019, mainly because of last year's sharp drop in oil prices, state news agency KUNA reported on Sunday.

Kuwait, which makes half its revenues from oil, had its finances squeezed by an oil price crash and by the COVID-19 pandemic, while a draft law that would allow it to tap international debt has stalled amid disagreement between successive parliaments and cabinets.

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The International Monetary Fund estimated in April that Kuwait's GDP contracted 8 percent in 2020.

KUNA based its report on Central Bank of Kuwait's governor, Mohammad al-Hashel, who cited preliminary estimates and statistics and said the institution used all the tools available to it to blunt the pandemic's impact.

He said preliminary estimates and statistics also showed the headline inflation rate increased to about 2.1 percent in 2020 from about 1.1 percent in 2019.

Kuwait's population, which mostly comprises expatriate workers and their families, declined by 2.2 percent in 2020 after growing 3.3 percent in 2019.

Sources told Reuters in April that Kuwait has reached an agreement with state-owned Kuwait Petroleum Corporation under which the company will pay the government billions in accrued dividends, part of government efforts to cover the deficit.

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