Kuwait’s ambition to diversify its oil-based economy away from hydrocarbons has been in place for more than two decades. Although the ambition predates the launch of New Kuwait 2035 in 2017, the long term development blueprint represents the most comprehensive and far-reaching attempt yet to move beyond oil and fast-track growth in the other areas of the economy. Although efforts are beginning to pay off, with progress in finance, logistics, ICT and tourism, the success of ongoing reforms will be crucial if the country is to fully realise the ambitions laid out in the plan.
Modernisation
Kuwait’s first moves towards diversification started to gain traction in the early 2000s, at a time when oil consistently accounted for over 90% of export revenues. Early initiatives during this period focused on privatisation, including in the telecoms and health care sectors, as well as infrastructure modernisation and private sector development. From 2008 these increasingly took the shape of public-private partnerships (PPPs), thanks to the introduction of the country’s first PPP Law that year. The passage of the law came amid the global financial crisis, an event which underscored the imperative for diversification as a safeguard against economic shocks. The law facilitated the development of the Al Zour North Independent Water and Power Project, the first PPP project in the country. In August 2014 the law was amended and the Kuwait Authority for Partnership Projects (KAPP) was established, with the minister of finance acting as the chair. The KAPP is now the chief regulatory entity for PPP projects in Kuwait.
Although these early diversification efforts were largely successful, momentum often faltered during times of high oil prices which, by May 2014, had reached almost $120 a barrel. However, between mid-2014 and the beginning of 2016, the price of oil dropped by 70%, representing one of the largest oil price declines in modern history, the third-largest decrease since World War II and the longest-lasting since the supply driven collapse of 1986. The slump highlighted the dangers of over-reliance on oil and resulted in an intensified appetite for economic reform and a renewed push towards diversification goals. These efforts culminated in the adoption of the New Kuwait 2035 framework.
Long-Term Vision
New Kuwait 2035 is centred around seven interlinked pillars: effective civil service, diversified and sustainable economy, high-quality health care, creative human capital, sustainable living environment, developed infrastructure and strengthened global positioning. Its core aims are to raise non-oil GDP, increase private sector participation across the economy and attract greater levels of foreign direct investment through the Kuwait Direct Investment Promotion Authority (KDIPA). Although early progress was hampered by the pandemic, in September 2025 the IMF forecasted a return to growth for the year with non-oil segments of the economy on the rise. The non-oil sector’s contribution to GDP grew by 3.6% in 2024, while non-oil exports were up 17% from the previous year.
Key sectors earmarked for growth by New Kuwait 2035 include finance, ICT, tourism and logistics. Kuwait’s banking system remains among the most stable in the GCC, while the KDIPA incentives attract regional and international banks. The authorities are emphasising the burgeoning financial technology segment and supporting its development. Tied into this is the focus on ICT, one of the economy’s fastest-growing sectors. Kuwait enjoys one of the highest internet and mobile penetration rates worldwide, with around a 99% rate in 2025 with 5G services, fibre-optic cabling, satellite connectivity and Wi-Fi accessibility throughout the country. In June 2025 advanced 5G technology was rolled out in laying the groundwork for future 6G advancements.
New Kuwait 2035 emphasises digitalisation across the board, with drives towards digital government, tech entrepreneurship and the creation of a digital ecosystem that supports start-ups. As the country seeks to ramp up activity in the sector, the focus will shift towards attracting and retaining top talent, addressing data and privacy concerns and effectively managing the cybersecurity threat that comes with a rapidly digitising economy. On this point, the government established the National Cybersecurity Centre in 2022 to protect government networks and critical infrastructure assets.
Development
The logistics sector is another area being targeted under New Kuwait 2035, as the government looks to leverage its strategic geographic location at the head of the Gulf. In February 2025 Minister of Public Works Noura Al Mashaan signed a contract with China State Construction for the study, design and pre-implementation services of Mubarak Al Kabeer Port. Situated on Boubyan Island in the north of the country, the development is central to New Kuwait 2035 and plays a key role in transforming Kuwait into a leading centre for cargo and commercial activities, and international trade. The development also aligns with the broader vision, which in addition to commercial investments, envisions housing developments and tourism projects that leverage the island’s unique natural features.
Indeed tourism, once a peripheral sector in Kuwait’s economy, is now a priority under New Kuwait 2035. Visa reforms, waterfront regeneration and hotel expansion have bolstered the sector in recent years. Tourism’s contribution to GDP grew by 23.2% in 2023 (from a modest base of around 0.5% in 2022), with a further jump of 12.1% expected between 2023 and 2024. The World Travel & Tourism Council forecasts that the sector will expand at a compound annual growth rate of 3.4% from 2024 to 2034, adding nearly 65,000 new jobs to the economy.
Despite clear plans and the far-reaching visions of Kuwait’s leadership, progress towards goals has been challenged by frequent parliamentary gridlock. Cabinet reshuffles have delayed important economic reforms, while policy discontinuity has been a factor as new administrations revise prior commitments and momentum in some areas falters. An example is the Madinat Al Hareer mega-project – also known as Silk City – billed as one of the largest mixed-use development projects in the world. Originally proposed in the 1980s, the initiative has evolved into a vast urban and economic development that covers an area of over 250 sq km, including Subiyah district and Boubyan Island. Although the latest master plan for the city was approved in 2014, movement has been challenged, with various hurdles around land use plans, regulatory frameworks and shifting political priorities hindering progress. The project has been on hold since 2019.
Reform Plans
To break the political gridlock that was preventing the business of government from advancing, the emir dissolved Parliament in May 2024 and suspended parts of the constitution for up to four years. This has allowed reforms to be expedited, echoing the emir’s calls for a new age of reform and strategic development, the enhancement of infrastructure, and the strengthening of health care and education systems that he made in his 2024 inaugural address to Parliament. International entities including the IMF recognise that the move presents a window of opportunity to implement fiscal and structural reforms. In the Northern Economic Zone, of which Silk City is a key part, there appears to be fresh impetus. In June 2025 Prime Minister Sheikh Ahmad Abdullah Al Ahmad Al Sabah chaired a meeting to generate renewed momentum behind the project. Discussions centred around boosting private sector participation through a flexible legislative framework and competitive incentive structures designed to attract key players in the industrial, commercial and tourism sectors.
Diversification Agenda
A key driver in the current push for reform is Kuwait’s growing partnership with China under the auspices of the latter’s Belt and Road Initiative. The first phase of Silk City includes the activation of the China-Kuwait agreement on master planning and the development of legislation for an economic zone governed by independent institutions. Kuwait’s diversification journey appears to have reached a pivotal moment.
With the positive economic outlook, important progress on key reforms and a renewed political resolve to get previously stalled projects moving again, the coming years will be critical for New Kuwait 2035 in translating ambition into execution. Progress will depend on consistent policy delivery, greater transparency and institutional coordination, and an attractive framework for the private sector. Under the leadership of the new emir and a new Cabinet, there is a renewed confidence in the country that progress can be made over the coming years.
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