Research Components Agree to Increase Consumer Confidence Rates

ARA Research & Consultancy has released its Consumer Confidence Index in Kuwait for April 2023, in collaboration with Arab Times Newspaper and under the sponsorship of Lexus.

The research components almost unanimously expressed a rise in their levels of confidence in the research indicators, recording a ratio of 103 points for the General Index, by adding 4 points within a month, down 8 points on an annual basis.

Noting that consumer confidence research in most countries around the world has taken an important direction in the current circumstances, to identify the tangible facts of the trade and economic activity and to perceive expectations based on the tendencies of consumers and the level of their purchasing power.

In light of this observation, it is worth contemplating about the most important factors that led to an increase in consumer confidence in Kuwait during April:

1. It is certain that the higher the price of oil and the stability of the law of its supply and demand, all other factors, financial and economic, recover as well. This fact confirms the objectivity and practicality of the decisions taken by OPEC to reduce production to protect prices and preserve markets’ balance.
2. The resulting financial solvency in Kuwait has overcome the phenomenon of budget deficits in recent years and recorded a comfortable reserve.

III. Restricting the level of monetary inflation within acceptable levels despite the pressures of high-interest levels in the United States, European and other countries. This led to preserving the Kuwaiti Dinar and safeguarding the purchasing power of consumers, despite relative increases in prices of some commodities and other goods.

1. The continuation of Kuwait’s official policy to deploy capital for medium and long-term investments, the most important of which being in the oil sector and in infrastructure.

In addition to the recovery of some economic sectors in Kuwait, especially the real estate sector.

Real Estate Trading Jumped by 33% during March 2023

ARA’s Current Economic Situation Index recorded a ratio of 95 points, boosting its previous monthly ratio by 2 points and declining by 7 points on an annual basis.

If we compare these results with some of the countries around the world, we find that the positive direction in general and related to economic conditions in particular, differs in these countries that suffer from a sharp rise in interest rates, lowered currency values, and an unusual rise in prices of foodstuffs, transport and many services. Within this atmosphere, any increase in the confidence of respondents when assessing economic conditions is considered an important and necessary achievement for the continuity of market activity and the expansion of consumption magnitude.

The citizens granted the Current Economic Situation Index 90 points, adding 9 points to their previous balance, while the level of Arab residents’ ratio declined to 95 points, with a loss of 4 points within a month.

As for the regions, the opinions of the research components in the governorates were divided equally, whereby the rates decreased in the Capital by 11 points, Al-Farwaniya Governorate by 6 points and Mubarak Al-Kabeer Governorate by 4 points, while on the other hand, the previous rates in Hawalli and Al-Jahra Governorates increased by 12 points and Al-Ahmadi Governorate by 3 points.

Stability of the Expected Economic Situation Index

The Expected Economic Situation Index remained stable at 105 points compared to March, meaning that the respondents' convictions and opinions remained within the previous monthly context. It seems that the intermingling internal economic factors in Kuwait imposed a balance between them and the negative economic impact and financial developments spread globally, around:

• The military conflict in Ukraine and its impact on the global economy.
• The mechanism of fighting inflation, which relied on a gradual increase in interest rates to absorb capital and attract it to the funds of central banks in the United States of America and in Europe and consequently the central banks around the world being forced to follow this method. This led to a sharp decline in bond prices and the lack of companies and factories to access the necessary loans to continue

This problem can reach to the contraction of global economic growth, as the World Bank fears the possibility of facing these devastating results.

This in addition to the shaky US banking sector, which is threatened by further negative possibilities.

There is no doubt that these climates and realities spread among public opinion circles, including in Kuwait, negatively affect the future expectations in the economic field despite the positive economic and financial realities in Kuwait, including:

• Financial solvency and overcoming the previous budget deficit and the recorded budget surplus.
• Continuing the investment policy by official bodies, especially in the oil sector and in infrastructure. The value of awards during March reached 776 million dinars, an increase of 65% within a month

Inflation is Expected to Decline

The Current Personal Income Index boosted its monthly balance by 3 points, registering 95 points, and its annual balance decreased by 19 points.

The available data on the economic activity in Kuwait, especially the real estate sector, where trading increased by 37% in March, indicate an increase in the level of labour market needs and thus recording an improvement in personal incomes or at least maintaining their levels in some economic fields.

The decline in the level of the annual rate may be the result of external climates pressuring consumers.

The rate of citizens declined by 15 points for this indicator, while it increased among Arab residents by 17 points.

It is noted that the level of satisfaction for the category with monthly incomes of 2,850 dinars per month and more declined by 25 points within a month.

The Capital’s ratio declined by 10 points and Mubarak Al-Kabeer Governorate’s by 17 points, while Al-Ahmadi Governorate’s ratio gained 34 points.

The results of the research reveal a significant increase in the rates of private business owners, perhaps this period is the best for them.

Optimism Regarding the Expected Personal Income

The Expected Personal Income Index increased to 107 points, adding 8 points to its previous monthly balance, exceeding the annual ratio by 4 points.

This optimism among the respondents did not come from a vacuum but relied on several factors, including:

The increase in the relative price of oil, even though it lacks stability and continuity at times.

Controlling inflation and placing it as an official task before the authorities in an attempt to reduce its rate in the current fiscal year to 2.4% to protect the purchasing power of the dinar.

The increase in the average pension in 2022 for citizens to 1,300 dinars monthly.

Noting that the number of citizens receiving pensions reached 258.5 thousand.

These factors and other grants and subsidies for certain commodities and foodstuffs raise consumers' confidence that the days ahead will be better. As evidence for this, two components of the research participants expressed concerns with expected personal income, while 25 components expressed their contentment and confidence in future incomes.

Raising Citizens' Confidence Level in the Labour Market

Despite the decline in the Current Employment Opportunities Index by 29 points on an annual basis, which is a significant figure, in terms of the current reality, the recorded rate of April 2023 reached 128 points, adding 13 points to its balance compared to March. This is evidence of the extent to which the demand for the workforce has increased, at a time when job opportunities are declining in a wide range of countries.

Over the past months, it has been remarkable the extent to which the level of activation of the measures taken by the authorities in charge has been raised to achieve the task of expanding the participation of citizens in work in various government and private sectors.

The relevant ministries decided to encourage and motivate the companies that have honored their commitments regarding the employment of citizens and warned companies that have not fulfilled their commitment in this area to take legal actions against them.

For its part, the oil sector announced during March that the sector is offering male and female citizens 1,888 vacant jobs that they can join.

As an example from the private sector, the number of citizens working in the banking sector has exceeded 10,000 employees.

These employment opportunities are available to young men and women graduates of universities.

Will the Prices of Some Goods and Commodities be Liberalized?

The Purchase of Durable Goods Index stood at 100 points in April 2023, adding 4 points to its monthly balance and dropping by 20 points compared to April 2022.

This monthly increase in consumption activity was expected and logical due to the advent of the holy month of Ramadan and Eid al-Fitr, which impose more expenses and carrying out traditional duties on these occasions.

Importing companies and traders are raising the issue of liberalizing the prices of some types of goods and foodstuffs that are not subsidized by the government due to the instability of their prices, demanding that prices be determined on the basis of supply and demand.

Noting that the Ministry of Commerce spent 172.2 million Dinars in support of food and humanitarian supplies.

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