Balancing Geopolitical Challenges with Kuwait's Resilience

ARA Research & Consultancy has released its Consumer Confidence Index in Kuwait for February 2024, in collaboration with Arab Times Newspaper and under the sponsorship of Lexus.

The Consumer Confidence General Index strengthened its previous balance by one point, recording 113 points and adding 9 points compared to February 2023, marking one of the highest results in two years.

The stability of the index underscores the effectiveness of the positive factors across the various financial levels, liquidity, and the economic situation in Kuwait. These factors have created a balance against the negative and dangerous geopolitical circumstances, which is considered an achievement in the face of challenges.

The research data and findings revealed that while the General Index lost ground in 14 out of 27 components, consumer confidence improved in four indices, most important of which is the job opportunities index, which increased by 13 points within a month.

This stability and enhancement of consumer confidence under the current circumstances relied on several achievements in Kuwait at various levels:

1. Market gains by the stock exchange surpassed previous figures, with increased foreign investment in the stock market activity. The premier market recorded a capital value of 35.3 billion dinars for 33 companies, and the weekly market liquidity reached 273 million dinars.
2. Despite unstable oil prices and some negative expectations due to anticipated retraction in the global economic growth, Kuwait has managed to achieve stability and acceptable oil prices.
3. By the end of 2023, Kuwaiti banks' assets reached 87.6 billion dinars, a historic level with 3.7% increase, and foreign assets amounted to 24.8 billion dinars, constituting 28% of the total banking sector assets.
4. In addition to the official policy of investing in the oil sector and infrastructure.
5. Strengthened support policies for food and essential commodities to alleviate pressures of high prices affecting all countries.

These are some of the facts that reflect Kuwait's financial and economic reality in the face of the external situations’ repercussions.

Al-Jahra Governorate Boosts Its Current Economic Situation Index

Survey respondents gave the Current Economic Situation Index 108 points, adding two points within a month and boosting the annual ratio by 9 points. Nevertheless, 11 out of 27 components showed a lack of confidence in the Current Economic Situation.

Regionally, Al-Jahra Governorate added 18 points to its previous score, Hawalli Governorate 8 points, Al-Ahmadi Governorate 4 points, and Mubarak Al-Kabeer Governorate one point, while the index declined in Al-Farwaniya Governorate by 9 points and the Capital by 6 points.

Notably, categories with lower education levels raised the Current Economic Situation Index, with intermediate certificate holders and below recording 116 points, adding 14 points, and secondary certificate holders recording 119 points, also adding 14 points to their previous balance.

The survey highlighted a decline in 6 out of 7 indicators among those with monthly incomes between 2250 and 2849 Kuwaiti dinars, with the ratios ranging between a maximum of 61 points and a minimum of 18 points. Also, the index for citizens declined by 4 points, while Arab residents witnessed a 5-point increase.

Decline in Confidence in the Current Personal Income

The Current Personal Income Index recorded 93 points, down 9 points from January, reflecting a feeling of decrease in the current income’s purchasing power. This decline was influenced by rising prices for several foodstuffs, goods, and services due to the repercussions of the security situations in maritime passages, leading to increased transportation costs and prices for all imports from abroad. In addition to the impact of inflation  which reached 3.18% in Kuwait, while also noting that prices for some food items multiplied due to natural factors reducing production in many countries, such as a 40% increase in global coffee prices.

Stability in Expected Economic Situation Index

The Expected Economic Situation Index stabilized at 122 points, maintaining its January level. Survey respondents showed mixed opinions and convictions, with 12 components recording negative levels and 14 expressing optimism about the Expected Economy, while two components remained similar to last month. The Capital's confidence level rose, scoring 134 points, an increase of 11 points within a month.

Increase in Confidence in Expected Income

ARA’s Index for Expected Personal Income rose to 112 points, adding 4 points to its previous balance, in contrast to the 9-point decline in the Current Personal Income Index. This phenomenon confirms high confidence in the expected financial situation, based on Kuwait's robust financial and economic realities and their capability to implement the overall governmental developmental projects. Citizens rated the Expected Personal Income Index at 107 points, up 5 points, while Arab residents scored 115 points, adding two points.

Regionally, three trends emerged: Hawalli Governorate improved by 11 points, Al-Ahmadi Governorate by 9 points, and Mubarak Al-Kabeer Governorate by 5 points, while Al-Farwaniya Governorate and Al-Jahra Governorate remained stable at their last month levels. The Capital stood out with an 8-point decline within a month.

The diverse responses and evaluations of Personal Income by respondents reflect the varied convictions and opinions of different social groups.

Increase in Planned Employment Opportunities

The Current Employment Opportunities Index reached a record 151 points, strengthening by 13 points within a month, the highest in years, and noting a 29-point increase in this index level compared to February 2023.

This data confirms the extent of Kuwait's economic development and efforts to implement planned programs and projects. The Central Statistical Bureau's report on labor market updates until September 2023 showed the engagement of 107,000 citizens and residents in the labor market over nine months in 2023, with the total workforce in Kuwait rising to 2.897 million.

Youth aged between 18 and 35 gave the  Employment Opportunities Index 177 points, adding 30 points within a month, highlighting Kuwait's relative success in addressing the global challenge of youth unemployment.

Official sources confirmed an increase in planned jobs for the current fiscal year 2023/2024 to 23.7 thousand, up from 21.8 thousand the previous year.

Several Facilities to Support Consumption

The Purchase of Durable Goods Index recorded 111 points, losing one point within a month. This stability was secured by various initiatives, including:

- Government subsidies for foodstuffs and essential goods prices.

- Bank loans for housing and various products.

- Payment facilities for purchases up to 500 dinars, payable over four months without interest or price increases.

- Support expenses for food supplies jumped by 13% to 386 million dinars in 2023.

- The average daily credit card purchase rate was about 112 million dinars, while personal business loans reached 816 million dinars in 2023.

Within this context, females recorded a 19-point increase in the Purchase of Durable Goods Index, while males registered a 17-point decline.

Notably, the index in the Capital fell by 10 points to 78 points within a month.