The Purchase Index Recovers, While the Employment Opportunities Index Declines Among Arab Residents

ARA Research & Consultancy released its Consumer Confidence Index for Kuwait for November 2024, sponsored by Lexus.

ARA General Index maintained its level with no change, recording 114 points at the end of November. While the confidence indexes for the Current Economic Situation and the Expected Economic Situation increased, the indexes for Current Personal Income and Expected Personal Income declined. Similarly, the Employment Opportunities Index dropped, while the Purchase of Durable Goods Index witnessed a remarkable increase, making up for the losses it incurred in October.

The results were similar between citizens and Arab residents in general. The General Index decreased by three points among citizens, reaching 115 points, while it increased by two points among Arab residents, reaching 110 points. Furthermore, similar results were observed between males and females, with the General Index increasing by four points among females to 113 points and decreasing by four points among males to 114 points at the end of November.

Confidence Indexes in the Economy on the Rise
Both the Current Economic Situation and the Expected Economic Situation Indexes increased by similar proportions. The Current Economic Situation Index rose by four points to reach 110 points, while the Expected Economic Situation Index increased by five points to record 121 points. This trend reflects a general sense of optimism and confidence in the economy, despite the decline in the Kuwaiti oil price to USD 75.1 per barrel, or 11.4% below its average of USD 84.4 per barrel in the fiscal year 2023–2024, which pressures the budget and risks falling into a deficit that could reach 3 billion dinars.

This positive trend is attributed to several economic and financial achievements, including:

• The general reserve of the Kuwait Petroleum Corporation reached its highest level ever, amounting to 20.35 billion dinars.
• The Central Bank of Kuwait fixed the interest rate at 4%, ensuring financial stability and protection of investments.
• The robust solvency of Kuwait's banking deposits.
• The value of real estate contracts transactions in October amounted to about 331.1 million Kuwaiti dinars, an increase of 16.8% compared to September and 6.2% higher than October 2023, which reflects positively on a wide range of sectors linked to the real estate and construction activity.
• The stock market recorded various gains, including market gains of 1.04 billion dinars achieved in one week, raising the market capitalization to 42.321 billion dinars, which is an increase of 2.5%.

Decline in Personal Income Indexes
The Current Personal Income Index and the Expected Personal Income Index declined after recording high levels in the past two months. The Current Personal Income Index fell by six points in November, reaching 103 points. Similarly, the Expected Personal Income Index dropped by two points, settling at 109 points by the end of November.

It is worth noting that wage increases ranged between 1% and 2% only over a year, which is lower than the inflation rate, thus weakening purchasing power. According to AlShall's report, the average monthly wage for Kuwaiti employees in the public sector at the end of the second quarter in 2024 was 1,966 dinars for males and 1,387 dinars for females. In the private sector, average wages were approximately 20% lower, with monthly averages of 1,648 dinars for males and 1,075 dinars for females.

For expatriates, the average monthly wage in the public sector was 807 dinars for males and 724 dinars for females, nearly double the levels in the private sector, where average monthly wages were 310 dinars for males and 425 dinars for females.

Unexpected Decline in the Employment Opportunities Index
The Employment Opportunities Index dropped by 18 points to record 133 points at the end of November, marking its lowest level in six months. This decline is primarily due to a decrease in confidence in job opportunities’ availability among residents, as their index fell to 122 points, its lowest level since March 2021. On the other hand, the index increased by 3 points among Kuwaiti citizens, reaching 148 points.

According to the latest statistics from the Central Statistical Bureau, the total workforce in Kuwait reached 2.14 million in the second half of the year, representing a notable growth with an annual increase of 2.5%.

Purchase Index Regains Its High Levels
The Purchase of Durable Goods Index recovered the points it lost last month, recording 122 points with a 10-point increase in November. It is important to note that the index dropped by 13 points among citizens, while it rose by 39 points among Arab residents. Expectations of lower interest rates may have been one of the reasons for consumers to delay purchases of durable goods in October. With the recent stabilization of interest rates, the waiting period seems to have ended.

Spending during the first nine months of the year through credit cards amounted to 3.43 billion dinars, including both citizens and residents, an 11% increase compared to the same period last year. Furthermore, new loans granted during the first ten months of the year reached 2.81 billion dinars, with a cumulative growth of 5.2% in the total value of loans granted, amounting to 56.37 billion dinars. This translates to an average loan value of 13,078 dinars per person and over 90 thousand dinars per family, equivalent to approximately USD 300 thousand.

These figures highlight one of the key factors driving increased purchasing activity and higher consumption levels, supported by Kuwait's financial solvency.

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