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Kuwait consumer spending softens in May

KUWAIT, June 14, 2018

While seasonal factors weighed on consumer spending in Kuwait during May, conditions remained strong compared to 2017, with the consumer spending index rising 7.5 per cent year-on-year (y/y), said the National Bank of Kuwait (NBK).

NBK’s consumer spending index, a monthly indicator developed by the Economic Research Department, was supported by firmer oil prices, improving consumer confidence, and steady employment. Momentum is expected to remain robust throughout 2018, said NBK in its latest Economic Update.

Spending on durables retreated by 4.2 per cent month-on-month (m/m), pulled down by softer auto sales and furniture purchases ahead of the summer season. The slowdown also coincided with the first two weeks of the holy month of Ramadan, during which the consumption of durables is usually subdued. The durables index, however, maintained a good pace of growth relative to last year, settling at a strong 8.9 per cent y/y in May.

Similarly, consumption of services and non-durables slipped in May, by 0.2 per cent m/m and 3.9 per cent m/m, respectively. The declines were also impacted by the start of the holy month (mid-May), as well as the end of the academic year. The services sector continued to register strong growth compared to 2017, with its index up 10.6 per cent y/y in May, while the non-durables index eased to 0.3 per cent y/y, its slowest pace since December.

Consumer spending is projected to remain healthy through 2018.However, uncertainty over the future income and employment prospects of expats – following higher expected service and utility fees, as well as the state’s efforts to reduce expat employment – may weigh down on consumer spending.

Meanwhile, spending by Kuwaiti nationals is expected to remain strong, thanks to low inflation, healthy employment, and higher public spending. – TradeArabia News Service

Tags: Kuwait | Consumer spending | NBK |

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