Kuwait enters a phase of consumer caution; spending drops 4.66% in first nine months
The slight decline in consumer spending may not yet signal economic weakness — but rather a maturing of financial behavior in Kuwait. The country is transitioning toward a more selective, rational, and data-driven economy, where consumption aligns more closely with sustainability and long-term stability.
After four years of continuous growth in consumption, Kuwait’s domestic spending has entered a phase of measured slowdown. Data from the Central Bank of Kuwait show that spending by citizens and residents declined by 4.66% during the first nine months of this year, reaching 34.35 billion dinars, compared to 36.03 billion dinars in the same period last year — a drop of 1.68 billion dinars.
Spending Channels Show Mixed Trends
The decline affected most payment channels:
- Cash withdrawals fell sharply by 10.56%, to 6.8 billion dinars, compared to 7.6 billion dinars in 2024.
- Online spending decreased by 8%, from 14.3 billion dinars to 13.11 billion dinars.
- Point-of-sale (POS) transactions were the only bright spot, growing 3% to 14.39 billion dinars, up from 13.98 billion dinars last year.
A Correction Phase After Post-Pandemic Expansion
Economists interpret this decline as a natural correction phase following years of accelerated consumption since 2021, driven by deferred demand, rising liquidity, and post-pandemic optimism.
Today’s trend reflects greater spending restraint, influenced by tighter monetary policies, slower global growth, and a renewed household focus on saving over spending.
Structural Transformation in Payment Behavior
A deeper look at spending patterns reveals a fundamental shift in Kuwait’s financial behavior — in 2019, cash dominated with 49.3% of total spending (9.32 billion dinars out of 18.88 billion dinar; by contrast, in 2025, cash now represents less than 20%, as digital payments — POS and online — command the majority.
The shift is striking — online payments have surged by 838%, reaching 13.1 billion dinars in the first nine months of 2025, up from just 1.39 billion dinars in 2019 and cash transactions fell 26.7% in the same period, from 9.34 billion dinars to 6.83 billion dinars.
This evolution marks a transition from a “cash-based” to a “code-based” economy, where trust has migrated from paper money to digital systems. Money is no longer something tangible kept in a wallet — it has become data, circulating in a secure digital ecosystem.
Implications for SMEs: The Weakest Link
The slowdown, though modest in numbers, poses a serious challenge to Kuwait’s small and medium enterprises (SMEs) — a sector still recovering from the pandemic’s economic shock. SMEs depend heavily on daily sales and fast cash flow, unlike large firms that enjoy financial reserves.
When consumer sentiment weakens, these businesses face shrinking revenues and steady expenses, threatening their ability to sustain operations or expand.
Since 2021, many SMEs have thrived on the boom in digital payments, delivery services, and e-commerce. Yet, the recent decline in consumption — especially online — has eroded profit margins and delayed growth plans.
Policy Direction: Stimulating Domestic Demand
If this downward trend continues, Kuwait risks entering a prolonged phase of “consumer slowdown.” Policymakers should consider:
- Stimulating domestic demand through targeted spending incentives.
- Facilitating access to affordable financing for SMEs.
- Launching structured support programs that enable small businesses to integrate into a sustainable, diversified economy.
The strength of this sector lies not merely in survival but in its ability to contribute to economic diversification and reduce dependence on government expenditure as the main driver of growth.
The transformation in spending patterns reveals a deeper cultural and psychological change. Where “trust” once resided in paper money, it now lies in digital value — an abstract but secure form of economic exchange.
This signals not only a modernization of payment systems but a redefinition of value itself, as liquidity becomes less about what is “held” and more about what is “connected.”
The slight decline in consumer spending may not yet signal economic weakness — but rather a maturing of financial behavior in Kuwait. The country is transitioning toward a more selective, rational, and data-driven economy, where consumption aligns more closely with sustainability and long-term stability.
