Kuwait’s non-oil economic activity has moved at a moderate pace in recent months, according to a new report by the country’s National Bank. The report also noted that growth in domestic credit and consumer spending has slowed compared to prior levels, reported Al-Qabas Daily.
The performance of the stock market also declined in the third quarter of 2023, reflecting concerns among investors around the world regarding the impact of continuing rising interest rates.
Despite these challenges, the report points to several positive developments in the country’s economy. For example, the pace of project awards in the third quarter of this year has been on an upward trend, indicating an improvement in investment spending during the coming year. Indicators have also emerged indicating that real estate activity has begun to stabilize after previous declines.
Furthermore, higher oil prices could help boost Kuwait’s financial position and increase investment in infrastructure. The price of Kuwaiti export crude reached $98 per barrel at the end of the third quarter of this year, rising by 26% compared to the levels recorded at the end of last June. This increase in oil prices was driven by tightening market fundamentals.
In addition, global geopolitical risks have increased due to the crisis in Gaza and the potential for regional escalation. However, reducing the production quota still represents a challenge for Kuwait, as the country is looking to make the most of the Al-Zour refinery, which has a production capacity of about 650,000 barrels per day. The refinery provides diesel fuel, low-sulfur gas oil, and fuel oil to international markets, which need additional quantities of crude oil.
This goal was achieved by redirecting crude oil intended for export to the local market. The report also noted that the growth rate of credit card and debit card transactions declined to about 7.8% on an annual basis in the second quarter of 2023, compared to 13% in the previous quarter.
This slowdown came against the backdrop of rising borrowing costs and an uncertain outlook surrounding the global macroeconomy. Although further moderation is possible, consumption expectations for 2024 are set to be supported by expectations of stable or slightly lower interest rates next year, as well as expansionary government spending.
Overall, while Kuwait faces challenges in both the local and international crude oil markets and growth of consumer spending slows, there are positive developments that could indicate a better economic outlook for the country.
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