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

Alsharq Tribune- World News 

Fitch Ratings has affirmed Kuwait's Long-Term Issuer Default Ratings (IDRs) at 'AA-' with a Stable Outlook.

Kuwait's 'AA-' rating is supported by its exceptionally strong fiscal and external balance sheets, with sovereign net foreign assets relative to GDP the highest among all Fitch-rated sovereigns.

However, the rating is constrained by weaker governance than peers, heavy dependence on oil and a costly welfare system and la

rge public sector, which could be a source of long-term fiscal pressure, despite spending rationalization efforts.

Fitch said the Middle East conflict will continue to affect Kuwait's ability to export oil, given its dependence on the Strait of Hormuz.

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

Kuwait’s oil production declined by 70% to 0.78m/barrel (b)/d in March-May 2026 with a recovery to 1.65m b/d in June and about 2m b/d in July.

“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,” said Fitch. It also forecast Kuwait's average oil price at USD81.4/b for FY26, up 21% from FY25, and to fall in FY27.

Fitch expected 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.”

Furthermore, it expected inflation to rise marginally in 2026 before easing in 2027.