Record Surge in Expected Economic Situation Index
ARA Research & Consultancy has released its consumer confidence index in Kuwait, for May 2024 under the sponsorship of Lexus.
The General Index recorded 114 points in May, achieving its highest level in over three years, with an increase of 9 points in a single month. This increase is driven by improved expected indices regarding economic conditions and Expected Personal Income. Four out of the six indicators that make up the study showed significant increases, while two indicators remained at their previous monthly levels.
May also witnessed a historic royal decree dissolving the National Assembly and suspending some constitutional articles, a post-liberation first for the country. Undoubtedly, the heightened consumer confidence reflects the great hopes for a forthcoming historic phase, following disputes between the Executive and Legislative Councils, which lead to the paralysis of projects and even a decline in the state of infrastructure.
In this positive climate, the governorates scored high levels to the General Index; the Capital Governorate scored the highest this month at 124 points, gaining 28 points within a month. The General Index also increased by 13 points in Hawalli Governorate, 8 points in Mubarak Al-Kabeer Governorate, 5 points in Al-Farwaniya Governorate and 4 points in Al-Jahra Governorate, while it dropped by two points in Al-Ahmadi Governorate.
Naturally, the General Index showed a greater improvement among citizens, increasing by 12 points compared to a 6 point increase among Arab residents.
A Leap in Expected Economic Situation after the Dissolution of the National Assembly
The Expected Economic Situation Index soared to an unprecedented level, recording 127 points, the highest in over two decades, with a one-month increase of 17 points. Similarly, the Expected Personal Income Index increased to 114 points, up by 11 points within a month, achieving a high level that is rarely seen, except on few significant events.
The increase in Expected Situation Index was observed across all the 26 social categories measured in the study, except for the group with Intermediate diplomas and below, which saw a decline in all their indices.
It should be noted that Moody's has renewed Kuwait's sovereign credit rating at "A1" with a stable outlook.
Improvement in Current Confidence Index
The Current Economic Situation Index reached 107 points, an increase of 5 points from April, bolstering its high gains from the start of the year.
The average price of Kuwaiti oil during April, the first month of the current fiscal year, was 89.9 USD, surpassing the estimated budget price of 70 USD by 28.4%. The average price for the fiscal year 2023-2024 was 84.4 USD. These figures and the comparison with the average oil prices since the beginning of 2023 have secured a revenue surplus compared to the budgeted oil price, playing a significant role in the economic situation.
Also, the Current Personal Income Index increased by 8 points from April to surpass the hundred mark at 102 points, although it is still far from its record levels from 2010 to 2014.
These results in the current indices, achieved under less than favorable regional and international geopolitical conditions, highlight the importance and positive impact of Kuwait's own political, financial, and economic circumstances, along with the relative improvement in individual income and wages.
The average monthly wages for Male Kuwaiti workers in the government sector was 1951 Kuwaiti Dinars, while the average wage for Females was 1366 Dinars, as of the last quarter of 2023. In the private sector, the average wages for citizens were lower than those in the public sector, with males earning about 1600 Dinars, an increase of 16% compared to the wages in 2022, while the average salary for Kuwaiti females was 1042 Dinars.
Additionally, the average salary for male expatriates in the government sector was 790 Dinars and 711 Dinars for females.
Significant Variance in Current Employment Opportunities Index.
ARA’s Employment Opportunities Index has maintained its low levels, recording 123 points without any increase from April. This level is the lowest the index has been in over 15 months.
It is important to note the sharp divergence among different social and regional groups regarding the Employment Opportunities Index. The index has decreased for 15 out of 27 social groups studied. Particularly, those with an Intermediate diploma or lower saw their index fall by 61 points, and those with a diploma by 30 points. Conversely, the index for High school diploma holders increased by 36 points. The differences are also evident regionally; the employment opportunities index for residents of the Capital increased by 19 points, while it decreased by 26 points among residents of Mubarak Al-Kabeer Governorate.
Stability in the Purchase Index
ARA Index for the Purchase of Durables Goodstabilized at its previous monthly level, recording 115 points, adding 23 points compared to May 2023, reaching moderate levels. This stability in purchasing levels was achieved due to favorable conditions, including consumer loan balances surpassing the 2 billion dinar mark for the first time. Personal loans for citizens and residents were cancelled totaling 66.6 million dinars during the first four months of the current year.
Conversely, the prices of foodstuffs, beverages, services and some goods have increased in recent months by approximately 5.8%, although the monetary inflation rate reached 3.8% in April, showing a relative decrease in May.
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