Consumer spending in Kuwait is ‘healthy’ thanks to a pickup in employment levels and an improving economic backdrop helped by higher oil prices.

However, factors including a reduction in the number of expat dependents, due to higher living costs, soft wage growth and the easing of household borrowing growth were listed as ‘downside pressures’ by the NBK Economic Research Department in a report published on Saturday.

The level of spending on credit and debit cards increased 16.6 percent year-on-year during the second of quarter of 2018, while total spending, including ATM withdrawals, increased by 9.9 percent, in line with NBK’s consumer index which also grew by 8.5 percent.

“Underpinning the pickup in spending is optimism over the current state of the economy and its future prospects, fostered by expansionary budgets and higher oil prices,” the report said.

Employment levels also increased year-on-year in the second quarter of 2018 by 2.9 percent, taking into account both Kuwaitis and expatriates.

While expat employment had slowed for the three years previously, the slowdown has now bottomed out, and expats still account for 80 percent of Kuwait’s workforce.

Growth in household debt has softened from 7.2 percent in 2017 to 6.5 percent in 2018, with a reduction in borrowing for the purchase of houses as well as durable goods.

“Meanwhile, although the total expatriate population is rising, the number of expatriate dependents continues to decline following increases in living expenses and still relatively soft employment growth,” the report said.

Further reading:
Kuwait consumer spending slows, weighed by holidays
Kuwait consumer spending eases to 6.5% in July
Non-oil revenue in Kuwait up 21.7%
Kuwait unemployment rate remains at 2.2%
Kuwait eyes creating 17,000 jobs for nationals in private sector

(Reporting by Imogen Lillywhite; Editing by Shane McGinley)
(Imogen.lillywhite@refinitiv.com)

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