Kuwait’s industry sector occupies a key position in the country’s diversification agenda, balancing the challenges of global market volatility with domestic priorities for sustainable growth. The sector has been reshaped by regulatory modernisation, infrastructure investment and strategic initiatives aimed at reducing reliance on hydrocarbons. Although manufacturing remains a relatively modest contributor to GDP, the government has placed industry at the heart of its New Kuwait 2035 roadmap and National Industrial Strategy (NIS) 2035, which seek to elevate value-added production, attract foreign direct investment (FDI) and expand employment opportunities for nationals.
The trajectory of the sector has been influenced by both internal reforms and external pressures. The Covid-19 pandemic exposed supply chain vulnerabilities, while subsequent geopolitical and economic developments underscored the importance of resilience and innovation. At the same time, Kuwait has advanced mega-projects such as Mubarak Al Kabeer Port and the Al Shadadiya Industrial Zone (SIZ), signalling long-term commitment to industrial clustering and international connectivity. These shifts mark a transition towards an industrial base that is increasingly diversified, strategically integrated and aligned with global standards.
Structure & Oversight
Kuwait’s institutional framework for industrial oversight has evolved to reflect regulatory priorities and developmental ambitions. The primary government entity responsible for the sector is the Ministry of Commerce and Industry (MoCI), which oversees certain aspects of internal and external commerce, promotes exports, and supervises the trade in goods and services. The MoCI independently investigates allegations of intellectual property (IP) right infringement and implemented an online complaints system for violations in 2021. These efforts improved accessibility and contributed to Kuwait’s removal from the 2022 US Trade Representative Special 301 Report, underlining recognition of enforcement progress.
The Public Authority for Industry (PAI) continues to serve as the principal regulator, with licensing activity accelerating in the second half of 2024 and the first half of 2025. Food, plastics, metals and construction-related products featured prominently among newly issued and renewed licences, highlighting sectoral diversification priorities. The PAI also oversees industrial zones, including Shuwaikh Industrial Area and SIZ. Phase I of SIZ was completed in July 2025, comprising over 1000 plots designed for small and medium-sized enterprises (SMEs) and light manufacturing. Of these, around 20% have been allocated to be managed by two key entities, the Kuwait Direct Investment Promotion Authority (KDIPA) and the National Fund for SME Development, thereby creating an ecosystem that balances largescale projects with domestic enterprise development. Further strengthening sectoral oversight is KDIPA’s role in promoting investor awareness of regulations – ensuring investor protection is rooted in compliance with legal requirements.
Industrial infrastructure integration extends beyond SIZ. KD186m ($605.6m) was allocated in the FY2024/25 budget for fieldworks at Mubarak Al Kabeer Port, developed in partnership with China Communications Construction Company, while the Sheikh Jaber Al Ahmad Al Sabah Causeway remains the critical link supporting logistics since its 2019 inauguration. Alongside government institutions, business associations such as the Kuwait Chamber of Commerce and Industry (KCCI) and the Kuwait Industries Union (KIU) continue to provide advocacy and training. KCCI’s membership stood at 79,000 as of 2023, with firms spanning various sectors, while KIU’s network of 270 companies advances industrial entrepreneurship through initiatives such as the Entrepreneurs Factory, a programme that supports Kuwaiti youth in establishing promising SMEs with technical training and mentoring.
Performance
Industrial operations reflect both cyclical fluctuations and structural resilience. Data from the Central Statistical Bureau (CSB) shows manufacturing’s contribution to GDP at 7.7% in the first quarter of 2025, consistent with figures across 2023-24. Growth in the non-oil sector slowed to 2% year-on-year (y-oy) in the first three months of 2025, down from 4% in the previous quarter. Despite a downturn in refined petroleum products output, manufacturing activity also grew by 4.3% in the first quarter of 2025, albeit down from the 12.2% reached in the last quarter of 2024. Growth in manufacturing activity should see an uptick in the coming quarters as development projects come to fruition following the enactment of the debt law in March 2025 (see Banking chapter).
Improvements in macroeconomic conditions should also weigh less on performance, with GDP growing 1% y-o-y in the first quarter of 2025, following seven consecutive quarters of contraction. Financing flows remain supportive. Moreover, IMF forecasts project recovery of 2.6% in 2025, supported by stabilisation in oil and non-oil activity. Employment rose by approximately 2% in 2024, with Kuwaitis making up around 15% of the total labour force. While the government aims to boost the participation of Kuwaitis across all sectors, the majority of locals prefer to work in the public sector and industry sector to rely on foreign workers.
Chemicals exports remain steady, with a compound annual growth rate (CAGR) of 6.6% for 2025-30 – including development in the chemicals distribution and specialty chemicals segments, which are significant contributors to the country’s non-oil export expansion. Food exports face strong competition in the region, with Kuwait and neighbouring GCC countries heavily reliant on imported foodstuffs. Challenges remain in the form of inflationary pressures and supply chain vulnerabilities, which restrict rapid expansion.
Investment
Economic activity in Kuwait’s industry sector reflects the interplay between government strategy, institutional financing and foreign collaboration. The NIS 2035 identifies land allocation and clustering as core drivers of competitiveness. Implementation is evident in SIZ, where plots designated for SMEs and large investors illustrate the government’s efforts to build integrated manufacturing clusters.
The Industrial Bank of Kuwait (IBK) remains a linchpin financier of industrial growth. Its industrial loan portfolio reached KD148.8m ($484.4m) by the end of 2024, complemented by KD157.6m ($513.1m) in commercial credit facilities. Support extended beyond manufacturing, with KD4.5m ($14.7m) channelled to 56 SME projects and KD8m ($26m) directed to 35 agricultural ventures in the same year. The lender’s capacity was reinforced in July 2024 when credit analysis firm Capital Intelligence Ratings reaffirmed its “A+” rating with a stable outlook, underscoring the resilience of Kuwait’s industrial credit environment.
FDI trends illustrate Kuwait’s industrial evolution. In October 2024 KDIPA reported KD206.9m ($673.7m) in new investment, concentrated in manufacturing and services with a focus on supplier localisation. This aligns with its ongoing efforts to promote supply chain localisation and enhance industrial competitiveness. To that end, the fieldwork for the Mubarak Al Kabeer Port project commenced in March 2025. A milestone of cooperation between China and Kuwait, the transport network is an example of foreign collaboration driving industrial infrastructure expansion.
Government efforts to streamline the investment environment have gained traction. Enhancement to KDIPA’s “one-stop-shop” services and regulatory reforms – such as the forthcoming Digital Trade Law codifying IP protections in e-commerce – align Kuwait with GCC trade facilitation standards. This legislative progress complements fiscal priorities. The 2024/25 budget emphasised industrial diversification and infrastructure investment, aligning with New Kuwait 2035 targets and creating a platform for private participation. Budgetary approval of 36 infrastructure projects for a combined $1.4bn underscores Kuwait’s commitment to these reforms. Domestic credit conditions have also supported expansion. Aggregate bank credit grew by 1.6% in the first three months of 2025, with corporate and business credit up by 2.6% quarter-on-quarter, creating a favourable environment for manufacturers.
Changing Times
Macroeconomic conditions in 2024 and 2025 highlight the pressures and opportunities facing Kuwait’s industry sector. Real GDP contracted by 3.2% in 2024, reflecting a subdued global economy and production cuts by the Organisation of the Petroleum Exporting Countries (OPEC) and other producers, collectively called OPEC+. Forecasts from the IMF suggest growth of 1.9-2.6% in 2025, supported by stabilising oil output and diversification policies.
Amid these shifts, manufacturing’s contribution to GDP remained steady in the first quarter of 2025, despite growth in the non-oil sector slowing in the same period. Inflationary pressures in 2024 raised production costs by 4.3%, compressing margins and emphasising the need for efficiency gains. The NIS 2035 highlights land allocation, infrastructure and cluster development as tools to address structural vulnerabilities. These initiatives are designed to complement labour market reforms to increase Kuwaiti participation in technical and supervisory roles. While expatriates remain the dominant industrial workforce, nationalisation programmes are gradually expanding Kuwaiti representation.
Energy transition policies are reshaping sub-sectoral strategies. An emphasis on energy efficiency and environmental sustainability is influencing investment patterns in chemicals and steel, which account for a key share of industrial energy demand. Currency stability and credit growth have mitigated financial risk, though external uncertainties remain factors for consideration.
Priority Segments
Industrial output continues to be dominated by the chemical and petrochemical sub-sectors, while food processing and steel production play complementary roles. Organic chemical exports were valued at approximately $3bn between 2024 and 2025, supported by emerging specialty chemical projects. Notable products included ethylene, polyethylene, urea and ethylene glycol, with neighbouring GCC countries as the primary market.
Steel remains a cornerstone of the industrial ecosystem, with crude steel production reaching 85,000 tonnes in July 2025. In January 2025 United Steel Industrial Company (Kuwait Steel) joined the government-subsidised building materials programme, helping to lower domestic rebar prices and intensify market competition. Between 2023 and 2025 Kuwait Steel recycled over 2m tonnes of scrap, supporting national sustainability goals and reducing dependence on imported feedstock. Local fabricators, including Al Askafi and Kuwait Technical Centre, are expanding operations to meet rising demand from infrastructure and energy projects. This growth is set to be bolstered by the establishment of a 60,000-tonne-per-year steel recycling facility by Metal & Recycling Company. The facility is designed to supply affordable scrap to domestic mills and cut CO₂ emissions and is expected to launch before the close of 2025. The January 2025 ban on iron scrap exports by the Ministry of Trade further secures raw material availability for local producers.
Iron and steel imports totalled $950m in 2024, compared with $900m in 2021. The Durra gas field, which Kuwait shares with Saudi Arabia, is under development, with production expected to commence in 2029. When complete, the facility will produce an estimated 1bn standard cu feet of natural gas per day.
Food manufacturing is shifting towards sustainable, locally driven production. The Kuwait Institute for Scientific Research’s success in commercial shrimp farming – using biofloc technology, which recycles the water continuously without using chemicals or antibiotics – highlights innovation in climate-resilient protein sources. The proposed development of a 100,000-sq-metre economic complex for fish farming – including feed production and seafood processing – signals growing momentum in Kuwait’s agri-industrial landscape. With the food industry bringing in revenue of $13.6bn in 2025, there is considerable scope for elevated investment in this sub-segment, especially as domestic demand for healthier food options and convenient online delivery services increases.
Emerging Segments
The pharmaceuticals and medical industries are emerging as a strategic priority in Kuwait’s industrial policy. The domestic pharmaceutical market is forecast to generate revenue of around $928.4m in 2025, with oncology standing as the largest therapeutic segment, accounting for $176m of the total. The sub-segment benefits from regional frameworks such as the GCC’s unified procurement scheme, which creates export potential for Kuwait-based producers. Regulatory reforms are strengthening IP protection, digitalising the drug registration process and embedding environmental, social and governance compliance into pharmaceutical manufacturing practices. These adjustments are designed to streamline market access, bolster investor confidence and position Kuwait’s pharmaceutical sector more competitively within the region.
Investment in production capacity continues to accelerate. A flagship development is industrial conglomerate Mezzan Holding’s sterile pharmaceutical manufacturing facility, scheduled for completion in 2027 and set to become the first of its kind in Kuwait. The project exemplifies how local companies are scaling up operations to meet both domestic demand and international quality benchmarks, while advancing technological sophistication in sterile production processes. In parallel, the sterile active pharmaceutical ingredients market is valued at around $150m in 2025 and is projected to expand at a CAGR of 7-8% between 2026 and 2033. This growth trajectory is driven by rising demand for injectable medicines, biologics and biosimilars, all of which are central to future treatment paradigms in Kuwait and the broader GCC.
Despite this momentum, production capacity in pharmaceutical and medical supplies remains modest, with two operating pharmaceutical factories and some KD80m ($260.5m) in investment as of March 2025. To address these limitations, the government encourages joint ventures with multinationals to transfer advanced technologies while promoting local opportunities in generics and packaging. Entities such as the Kuwait Pharmaceutical Industries Company, along with private firms linked to international research centres, play central roles in this strategy.
Plans & Programmes
Kuwait’s industrial transformation is guided by long-term plans under the National Industrial Strategy 2035 and the fourth Kuwait Master Plan (KMP) 2040. These frameworks establish quantitative targets and structural reforms aimed at reconfiguring the industrial base. The strategy seeks to double capital investment in the sector to KD11bn ($35.8bn) by 2035 and raise manufacturing value-added to KD2.4bn ($7.8bn). Research and development spending is targeted to reach KD55m ($179.1m), while specialised Kuwaiti employment is set to increase to 25,000 jobs. Priority areas include petrochemicals, food processing, pharmaceuticals, renewables, and advanced technologies such as artificial intelligence and nanotechnology.
Infrastructure is a cornerstone of these ambitions. The Al Abdali Economic Zone in the north of the country is advancing with the development of Mubarak Al Kabeer Port, with the latter scheduled for completion in 2026 with capacity for more than 8m containers per year. With 90% of the link road to the port completed as of March 2024, the project bolsters Kuwait’s positioning as a leading regional logistics centre. Complementing this, the KMP 2040 assigns land across the northern economic region, the urban region, the southern industrial region and the western region, each designed to balance population growth with economic diversification. By 2040 the Al Abdali Economic Zone is expected to employ 171,800 individuals, while the southern industrial zone will provide 157,000 jobs.
The KMP 2040 identifies sustainability as a strategic pillar, with green building codes, renewable energy integration and smart city innovations aimed at enhancing residents’ quality of life central to its efforts. The plan supports the deployment of eco-friendly technologies across energy, transport and industry, embedding environmental stewardship into the broader development framework. Kuwait will also host the International Conference on Sustainable Urban Infrastructure Development in February 2026, underlining intentions to align economic diversification with climate commitments. Partnerships with South Korea and China have further advanced sustainable housing and infrastructure projects, with pilot initiatives in smart city design and eco-friendly industrial zones.
The government is also advancing private sector participation through public-private partnership frameworks and incentives to raise Kuwaiti employment. The Kuwait National Development Plan 2020-25 continues to emphasise job creation for nationals and diversification in line with broader New Kuwait 2035 objectives. Challenges persist, however, with Kuwaitisation efforts hindered by skills gaps and retention issues linked to wage differentials. Addressing these imbalances requires stronger collaboration between industry, government and education providers to foster a globally competitive labour force.
Beyond employment, programmes targeting SMEs and entrepreneurship are being scaled up. The PAI’s cluster development initiatives and KDIPA’s supplier localisation programmes are designed to enhance linkages across sub-sectors. Budgets for 2024/25 prioritise industrial research and development, as well as innovation, underlining government recognition of the sector’s role in advancing technological competitiveness.
Outlook
Kuwait’s industry sector enters 2026 positioned between continuity and transformation. Anchored in chemicals and steel, the sector is gradually expanding into pharmaceuticals, food and advanced manufacturing. While headwinds – including inflationary pressures, labour challenges and regional competition – persist, ongoing infrastructure projects, rising FDI and policy reforms provide momentum for growth. With the NIS 2035 guiding long-term diversification, the country’s industrial base is expected to play a steadily larger role in economic resilience and competitiveness.
