Price controls designed to freeze food costs during the coronavirus outbreak in Kuwait have long outlasted the worst of the pandemic, causing indiscriminate economic havoc two years later.
It was a stopgap measure by one of the world’s richest countries, meant to protect an economy that relies on imports for more than 90% of its food.
But as its side effects increasingly come at a cost to companies and consumers, Kuwait’s experience carries a lesson for a growing number of nations around the world that are imposing or at least debating price controls to cope with record inflation.
“Controlling prices will lead to shortages,” said Eid Al-Shihri, an economist who’s a board member of the Kuwait Entrepreneurs Society. “When the government freezes prices, it shifts away from the market equilibrium, so those on the market supply side are affected.”
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