Question

In late February 2020, Kuwait government took some early initiatives to control the Coronavirus pandemic. For Kuwait, the pandemic is considered to be a Double-Edged Sword, as the lower demand for oil has reduce the nation’s income and has paralyzed the domestic economic activities. Despite government support, many companies continue to lay off workers, which may lead to further reduction of national income.

1.​How the virus pandemic has impacted Kuwait’s flows of goods and services and capital assets (capital flows)

Answer 1

With global pandemic numbers reaching all-time high, Kuwait is no exception to the rise of the same. The economy of Kuwait which primarily depends upon the exports of oil as a source of capital has been hit extremely hard as a result of the pandemic and is expected to go down even further as global oil prices have seen a rapid decline.
Kuwait has remained as one of the key exporters of oil across the globe. As oil prices fall in the international markets and the demand for oil is seeing a steady decline, the prices as well as the income which the Kuwait government earns from exports is falling sharply. This means that even when compared to the world, Kuwait has a lot lesser number of Covid patients, yet the country depends on others for its economy. This interconnected nature has meant that the exports of the country have fallen sharply. Apart from this, the supply of other countries which provide goods and services such as agricultural products to Kuwait have also been impacted as produce of agricultural goods remains low and prices have shot up drastically.
This means that Kuwait has a double-sided impact of the Covid pandemic. On one hand, the sharp global decline in demand for crude oil has meant that the country earns significantly lesser in terms of capital coming into the country and on the other hand it is seeing higher expenditure abroad to curtail the disease.
The demand for goods and services within the country is also falling as establishments are instructed to remain closed and people are not stepping out of their houses to make a purchase. The global economy is going through a tough phase of economic recession wherein the demand for goods and services remains low, as a result of which producers make losses to curtail which they fire people from their jobs and unemployment in the economies rise.
We can conclude by saying that the Kuwait government is seeing a tough time, wherein the global demand for crude oil has decline and this has led to extremely low capital investments or gains for the country. On the expenditure front that on healthcare and subsidies to people to protect them from the economic impact of the corona virus has shot up sharply,
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