RIYADH: Boosted by a robust macroeconomic environment, Kuwait is expected to witness solid growth in spending this year, according to a recent report by Fitch Solutions.
As relatively strong oil prices support export revenue, the report noted that consumer spending in Kuwait in 2023 will post moderate yet stable growth of 4.4 percent year-on-year, down from the 5.2 percent estimated in 2022.
In nominal terms, total spending will come in at 20.6 billion Kuwaiti dinars ($67 billion) in 2023, up from 19.2 billion dinars in 2022.
The rate of growth over 2021-2022 was higher than expected following a successful COVID-19 vaccination rollout, the Fitch report said, adding that a more stable outlook over 2023-2027 is predicted as the volatility linked to COVID-19 subsides.
The outlook for spending growth in 2023 is underpinned by the expectation that the introduction of a value-added tax will be postponed until 2024 amid concerns over inflation and the dissolution of Parliament.
The positive outlook for consumer spending in 2023 is also in line with the Fitch Solutions team’s forecast which states that the country’s real gross domestic product will grow by 2.7 percent in 2023 and another 5.1 percent in 2024.
The budgetary draft presented to the Parliament in January this year suggests that government spending will remain elevated and a potential budgetary deficit is likely.
The Fitch Solutions report expected oil prices to remain strong over 2023 and support both public and private sector spending in Kuwait over the next 12-14 months.
The most recent data from Kuwait Central Statistical Bureau indicates that consumer price inflation was recorded at 3.1 percent year-on-year in December 2022, down from 4.2 percent in December 2021.
The report forecasts Kuwait’s consumer price inflation to average 2.1 percent year-on-year in 2023. It also noted that the 2023/24 budget is likely to have strong provisions for essential subsidies which will keep inflation low.
In keeping with the country’s positive outlook, the Central Bank of Kuwait approved the Kuwait Finance House’s program to issue sukuk with a value not exceeding $4 billion, according to Al Arabiya.
