Kuwait has a geographically small, but wealthy, relatively open economy with crude oil reserves of about 102 billion barrels — about 7% of world reserves. Petroleum accounts for nearly half of GDP, 95% of export revenues, and 95% of government income.
Kuwaiti officials have committed to increasing oil production to 4 million barrels per day by 2020.
The rise in global oil prices throughout 2011 and 2012 is reviving government consumption and economic growth.
Kuwait has experienced a 20% increase in government budget revenue, which has led to higher budget expenditures, particularly wage hikes for many public sector employees.
Kuwait has done little to diversify its economy, in part, because of this positive fiscal situation, and, in part, due to the poor business climate and the historically acrimonious relationship between the National Assembly and the executive branch, which has stymied most movement on economic reforms.
In 2010, Kuwait passed an economic development plan that pledges to spend up to $130 billion over five years to diversify the economy away from oil, attract more investment, and boost private sector participation in the economy.