Kuwait hopes to reopen its economy completely by the end of August 2020. To achieve this goal, it has introduced a five-phase plan to open up businesses gradually depending on the success rate of each phase.
Governments across the world have adopted similar strategies and are treading with caution in deciding their next steps.
Road to recovery
In the article titled ‘Fumbling for the exit strategy’, The Economist writes how various governments around the world have come up with different plans to ensure businesses are on a path to recovery. The article emphasizes on the urgent need to devise exit plans as the alarming cost of hard lockdowns becomes clearer with each passing day.
The latest forecast by IMF shows Kuwait is expected to have a negative GDP growth due to subdued oil prices and cut in the oil production. Moreover, in an adverse scenario where the pandemic does not recede in the latter half of 2020, the global GDP could fall by an additional 3% this year, and if such a condition continues into 2021, the GDP may fall by an additional 8% next year compared to IMF’s baseline scenario.
To stimulate economic recovery, the government of Kuwait brought in a number of measures.
For example, the Central Bank of Kuwait cut the discount rate to a historic low of 1.50%, lowered the capital adequacy ratio for banks from 13% to 10.5% and eased the risk weight for small and medium enterprises (SMEs) from 75% to 25% to provide additional liquidity in the economy.
The Kuwait Banking Association (KBA) also announced a moratorium period of up to six months on bank loans including waiver of interest and charges, to alleviate the financial stress on affected entities including retailers and SMEs, and individuals.
A KPMG survey conducted over 4 weeks shows businesses remain deeply concerned about the current situation and employee safety and healthcare remains the most critical parameter.
Businesses, however, recognize that in order to emerge strongly from the lock down, their is a need for a transformational approach, specially transformation in operations, which will put them on the road to recovery.
70% of our participants say that employee health and safety should be the no.1 Priority for businesses as they come back from the lockdown
71% of our participants say that businesses need to go through Digital Transformation in order to stay connected with the customers and recover