Consumer Confidence Stability in the Face of Challenges

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

The General Index for the first month of the year recorded 112 points, losing one point within a month and exceeding the January 2023 index by 10 points. This index level is the highest since September 2022 and is considered a stabilization of consumer confidence in the face of all pressing factors.

Consumer confidence researches around the world take on additional importance under the current worsening international conditions.

To follow up on the ground economic, financial, and social conditions and to anticipate the expectations, inclinations, and directions of consumers, the results of consumer confidence studies in Kuwait for January were distinguished by several characteristics, including:

Reassurance and stability of confidence and reliance on internal factors, most notably:

A- Rise in oil prices.

B- Financial solvency and the size of investment funds abroad and their achieved returns.

C- Government investments in the oil sector and some other sectors.

Positive internal factors have created a balance against the extremely complex and risky international and regional conditions.

In these diverse climates, differences emerged in the opinions of respondents and the research components in the governorates establishing an example on the level of diversity among them:

The General Index in the Capital dropped by 10 points and in Al-Jahra Governorate by 8 points, while on the opposite side, this index rose in Mubarak Al-Kabeer Governorate by 23 points.

More Confidence by Respondents in the Current Economy

ARA Index for the Current Economic Situation registered 106 points, adding 4 points compared to last December and 11 points compared to January 2023.

Notably, 23 out of the 27 research components registered positive points for the Current Economic Situation. The citizens added 6 points, and 4 governorates increased their satisfaction level within a month, as did the youth aged 18-35, who raised their previous monthly score by 6 points.

The near-unanimous positive consensus reflects the general satisfaction with the current economic trajectory.

This positive wave among respondents was based on a set of factors:

A- The rise in the value of Kuwait's sovereign wealth according to the Global SWF report, which includes: Kuwait Investment Authority, the Public Institution for Social Security, and the Central Bank of Kuwait.

B- Financial gains achieved by the stock exchange.

C- The rise in oil prices, where Moody's expects the average price of oil barrel to reach 83 USD.

These are some of the factors that contributed to raising consumer confidence in the Current Economic Situation Index.

Stability of Respondents' Confidence in Economic Expectations

Respondents overcame all geopolitical factors pressuring public opinion’s psychology and maintained the Expected Economic Situation Index at 123 points, thus preserving the highest level for this index since October 2022.

Geopolitical developments and the resulting maritime transport disruptions, its exposure to risks, and the imposition to divert to alternative routes, may have led to doubled maritime transport expenses.

These pressuring factors on the consumers’ psychology were balanced by positive internal factors in Kuwait, allowing consumers to maintain the index level as it was in December.

Some of these factors:

A- Despite the instability and fluctuation of oil prices, they are achieving acceptable gains, with expectations of the average oil barrel price to reach 83 USD.

B- The strength of the banking sector.

C- The Kuwait Stock Exchange achieving excellent gains along with accomplishing significant internal developments.

D- Relatively controlling the inflation rate after surpassing the 3.36% level and maintaining the Kuwaiti Dinar as the highest-valued currency in the world.

E- The real estate sector recovery by 25%.

In addition to the official Kuwaiti policy that fosters investment in several areas, most notably the oil sector and infrastructure.

All these positive internal factors created a balance in the respondents' psychology, enabling them to maintain their confidence in economic expectations amidst the current regional circumstances.

Stability of the Current Personal Income Index

The Current Personal Income Index registered 102 points, maintaining the level recorded in December 2023, while the Expected Personal Income Index reverted to the average level of the previous year, recording 108 points, with a loss of 7 points from its previous monthly balance and enhancing by 7 points compared to January 2023.

It is noteworthy that there was a divide among the research components between a category that expressed satisfaction with the current income and another that was not satisfied with the income level.

At the Governorates level, there was a variation in the assessment, with levels dropping in Hawalli Governorate by 11 points, Al-Farwaniya Governorate by 9 points, the Capital by 6 points, and Al-Jahra Governorate by 3 points, while levels in the remaining governorates increased: Mubarak Al-Kabeer Governorate by 62 points and Al-Ahmadi Governorate by 19 points.

The disparity also emerged in the evaluation of current income among respondents, whereby the ratio rose for those with intermediate education certificate and below by 40 points, and diploma holders by 22 points, while the satisfaction level with incomes declined among those with higher academic degrees: 20 points for high school level and 15 points for university graduates.

This variance regarding current income, whether geographically or academically, is considered a natural result due to several factors, including the disparity in the recovery among different economic sectors and the diverse needs of the labor market.

The Oil Sector Continues Efforts for the Kuwaitization of the Workforce

The International Labour Organization released a report on January 10, 2024, expressing its concern over the rising unemployment levels internationally due to geopolitical conflicts in several regions and highlighting its worry about the pressures faced by the labor market in many countries. However, Kuwait is moving in the opposite direction with the expansion of the labor force required by the labor market.

The Current Employment Opportunities Index continued its upward trajectory, registering 138 points, boosting its monthly balance by 5 points, and jumping by 20 points compared to January 2023.

These achievements reflect the extent of Kuwait's economic growth and the recovery of certain economic sectors, especially the real estate sector, which serves as a driving force for other sectors.

The plan for the Kuwaitization of the workforce is achieving success in its directions, as the oil sector announced 1,211 job vacancies this year, awaiting qualified citizens.

Adjustment of Purchase Index Level

ARA Index for the Purchase of Durable Goods registered 112 points, declining by 4 points within a month. This decline is considered an adjustment due to the index's unprecedented rise in December 2023, as end of the year typically encourages renewing possessions and spending.

The decline affected some segments, especially youth aged 18-35 (down by 8 points), females (down by 15 points), and Arab residents (down by 7 points). The decline also affected three governorates: the Capital, Hawalli, and Al-Jahra Governorates, while Mubarak Al-Kabeer Governorate recorded an increase of 59 points from its December ratio, Al-Ahmadi Governorate 15 points, and Al-Farwaniya Governorate 4 points.

Loans provided by banks to the citizens and residents of Kuwait effectively contributed to market activity, moreover, the state subsidies for a wide range of goods and food items alleviate the burden of rising prices and guarantee the necessary needs of consumers.

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