Relative Stability in Consumer Confidence Over 11 Months

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

This month's data was characterized by two phenomena; the first is the convergence of the ratios of the various research components, without significant variances among them, indicating a convergence in the convictions and orientations of the respondents. The second is that April 2023 was the only month with a General Index ratio of 99 points, while the ratios of the other ten months all exceeded 100 points, varying between a minimum of 102 points and a maximum of 108 points.

The absence of variances among the different regional and social components indicates a convergence in the consumers’ evaluations regarding their confidence in economic and livelihood matters.

The General Index for November 2023 recorded a ratio of 104 points, adding one point within a month and declining by 5 points on an annual basis.

The governorates’ components were divided equally, with the ratios of Al-Farwaniya, Hawalli, and the Capital declining respectively by 5 points, two points, and one point, while the other governorates enhanced their previous balance: Mubarak Al-Kabeer by 5 points, Al-Ahmadi by 6 points, and Al-Jahra by 10 points.

It is noted that the ratio among citizens declined by 6 points, while Arab residents enhanced their monthly balance by 7 points.

The balance of consumer confidence in Kuwait comes in extremely complicated pressing circumstances in more than one region of the world, all the way to the neighboring region, and its repercussions since the start of the Ukrainian-Russian war and the difficulties it led to on all fronts, in addition to the instability of oil prices and market confusion.

These kinds of variables negatively affect consumers’ moods around the world and spread worrying and demoralizing climates. Despite these and other challenges, confidence rates in Kuwait have stabilized over several months. This means that positive internal Kuwaiti realities have secured and continue to secure a relative overall stability. Among the most important ones are the recovery of the stock market activity, the increase in the volume of bank deposits and bank profits, and the revival of the real estate sector and its positive impact on many other sectors.

On the official level, Kuwait ranked 21st among 25 countries achieving the highest GDP growth rate in 2022. This is in addition to the financial solvency and investments in the oil sector and infrastructure, along with the increase in consumption levels.

Al-Ahmadi Governorate Has the Highest Confidence in the Economic Situation

The Current Economic Situation Index recorded 102 points, adding 5 points to its previous balance and 6 points to its annual balance.

A series of internal factors contributed to raising the level of this index:

A 28% year-on-year increase in operating profits of banks over 9 months.

An increase in investments in the oil sector which amounted to 11 billion dinars until March 2023, and is expected to rise to 18 billion dinars by 2026.

An average inflation rate of 3.7% during the first nine months of this year, and it is expected to decline to around 2.5% during next year.

Noting the instability in oil markets and prices which contributes to confusing opinions by the respondents, in addition to the pressures of the worrying and challenging global and regional situations on the consumers’ psychology.

In this atmosphere, the Capital raised its previous balance by 8 points, Hawalli by 7 points, and Mubarak Al-Kabeer by 8 points. Meanwhile, Al-Ahmadi Governorate enhanced its previous monthly balance by 14 points, while Al-Farwaniya Governorate solely expressed dissatisfaction with the economic situation, declining by 5 points.

High school certificate holders expressed satisfaction with the economic situation, raising their confidence by 7 points, and consumers with intermediate level of education, diploma, and university degree holders all raised their previous balances by 5 points.

The rise in consumer confidence in the economic situation, boosts consumer market activity and supports the economy.

Top Earners Express Dissatisfaction with the Expected Economic Situation

In these circumstances, the Expected Economic Situation Index recorded a rate of 112 points, adding two points on a monthly basis and declining by 9 points on an annual basis. The relative stability in confidence in the Expected Economic Situation under current pressing conditions, due to international and regional situations, indicates consumer confidence in Kuwait's economic robustness.

Notably, the ratio of those with a monthly income between 1850 and 2249 Kuwaiti dinars declined by 15 points within a month.

Regionally, the rates varied between a 2 and 12 points of increase, except for Hawalli Governorate, where its monthly rate declined by 10 points.

Planning to Increase Salaries and Wages

The Current Personal Income Index recorded a ratio of 90 points, enhancing its balance by one point and declining by 7 points on an annual basis. Noting that 11 out of the 27 research components expressed dissatisfaction and a decline in their Current Personal Income confidence.

The decline in confidence of a group of respondents is not necessarily due to a decrease in personal income levels, but rather due to the increase in prices of goods, foodstuffs, and services, among others, while acknowledging the importance of the support provided by the state to reduce consumer burdens.

Leaked media information confirms that the relevant official authorities are planning and striving to increase the level of salaries and wages for public sector employees, with attention to improving the situations and incomes of retirees. These measures are expected to be taken at the beginning of next year.

Additionally, the ministry is preparing a research study regarding the affairs of private sector workers to take the necessary steps, including a relative increase in wages and salaries.

Further steps might be taken to enhance the grants and aids for segments of the Kuwaiti society; for example, the authorities paid 111 million dinars to housewives, and financial assistance to divorced women this year amounted to 36 million dinars.

Such forms of aid contribute to raising the personal income levels of citizens, thereby enhancing their purchasing power.

Vacant Jobs Since March

The Current Employment Opportunities Index recorded a ratio of 114 points, declining by 10 points within a month.

The rate among those with an intermediate education certificate or below declined by 50 points, moreover, the ratios for diploma holders declined by 11 points and university degree holders by 10 points. The rates also declined among high-salary employees, with the levels of drop ranging from 20 to 23 to 34 and up to 49 points.

Regionally, the Employment Opportunities Index in Al-Farwaniya Governorate declined by 43 points and in Mubarak Al-Kabeer Governorate by 27 points.

It is noteworthy the decline of 41 points in this rate among private business owners.

These near-universal figures across the different research components do not align with the general economic situation in Kuwait, which ranked 21st globally in terms of GDP. Moreover, the relative recovery of the real estate sector should naturally raise the level of demand in the job market. Perhaps at this point in the year, many companies postpone hiring until after the end of the year.

On the other hand, the data confirms that there have been 11,400 vacant jobs since March 2023 in the oil sector.

Kuwait Petroleum Corporation has accomplished its nationalization plan, achieving a 99.9% Kuwaitization rate in permanent contracts.

And to date, there are still 2,046 total vacant jobs available on contractor contracts in the Kuwait Petroleum Corporation and its subsidiaries, noting that the corporation and its subsidiaries employ about 5,413 Kuwaitis in contractor contracts.

Decline in Consumption Level in 5 Governorates

The Purchase of Durable Goods Index recorded 96 points, a decline of 9 points compared to the previous month of October.

19 out of 27 components expressed a decline in the purchase of durable goods during November.

The rates of 5 governorates declined; a phenomenon almost unanimously indicating a contraction in expenses during November. It could be the pressures from regional and global conflicts imposing some contraction in purchasing, and on the other hand, summer season and travel expenses could be factors in reducing expenditures. Noting that gold purchases in Kuwait over 9 months amounted to 14.1 tons, valued at over one billion dollars.

There was a notable increase in the volume of consumer loans to 290 million dinars over 10 months.

Moreover, the credit level granted by banks reached record levels, amounting to 53.12 billion dinars at the end of October.

These factors are supposed to contribute to an increase in the level of consumption, which must be monitored.

LEXUS SHOWCASE EXPERIENCE AMAZING AT GULFRUN 2023

The World of Lexus is powered by advanced tech & performance.

Mohamed Naser Al Sayer & Sons Est Co. and Lexus concluded its participation in the GulfRun event at Kuwait Motor Town recently. GulfRun features Auto Show where Automotive dealerships host their private garages to display vehicles and offer taxi-rides to visitors along with White Expo festival market which encompasses, store booths, exciting activities, and live music. alongside several restaurants and cafes.

Lexus the pinnacle of luxury demonstrated the advancement in technology and performance with the display of models including LC convertible, RX500, LX, LS, ES, RC, NX. A ride along 2 laps with a professional driver was also offered to feel the Lexus experience featuring the following models – IS 350F, LC 500, RC 350 F.

According to Mahmoud Abou Zahr Senior Business Director Lexus Kuwait “Lexus is the leading luxury automotive brand in the world, and especially in Kuwait, by far the most desired luxury automotive brand. We are overwhelmed by the response at Lexus garage, seeing the excitement of the audience specially among the females and the youth. I also thank the organizers of the mega event GulfRun and congratulate them for the grand success”.

In addition the vehicle display and track experience, Lexus garage also featured simulation corner for gaming activity, an augmented reality zone where visitors could distinctly explore the Lexus models in a virtual way as well as an accessory boutique. The hospitality corner had giveaways for customers who completed test drives, gifts for kids who visited the garage and refreshments.

The first GulfRun GP event was held at the Bahrain International Circuit in 2006; and has become the longest running event at the Formula 1 Circuit. With the inauguration of Kuwait Motor Town, the race was launched in Kuwait. In the time attack race cars are placed in their respective class according to capability, power, weight and tire type and participate in two days of racing to secure the fastest results in their classes.

Over the past few years Lexus has been constantly pushing the boundaries to elevate the standards of customer experience and reflect Omotenashi that stands for Japanese hospitality.

According to Bedour Faisal Al Sayer, Manager Advertising and Promotion                     “I appreciate the efforts and cooperation of Kuwait Motor Town and Suffix Sports towards this mega event, Lexus team was able to come up with an impressive garage where visitors can explore Lexus brand and products. Our aim was to provide a modern experience powered by the touch of advanced technology. Certainly, we will continue to partner for such events going forward to bring the unparalleled world of Lexus.”