General Index stable
 
 
General Index
 
105 
 
Current Economic Situation   Future Economic situation   Current Personal Income   Expected Personal Income   Current Employment opportunity   Purchase of Durable goods
 
99    104    102    105    140     89 
 
 

Consumer confidence dwindles over lower oil prices

ARA Research & Consultancy has released its August 2019 Consumer Confidence Index, in collaboration with the Arab Times newspaper and under the sponsorship of Lexus.

The General Index registered 105 points, down 4 points within a month and 12 points compared with August 2018.

Research findings ascribed the overall drop in consumer confidence in August mainly to the 25-point loss on the Purchase of Durable Goods Index and the 13-point loss on the Current Employment Opportunities Index. The other indices remained close to their previous ratios, with a small margin of change of no more than 3 points.

The fall in the Purchase of Durable Goods Index, which reflects the consumer market activity on the one hand, and in the Current Employment Opportunities Index, which reveals the status of opportunities and demand for workforce on the other hand reflects negative sentiment among consumers, which in turn affected both consumption and job opportunities.

A number of positive and negative developments have influenced the financial and economic situation, as well as the psyche, convictions and opinions of the Kuwaiti public.

  1. The most important positive aspect was the wise, responsible and moderate policy adopted by the Kuwaiti government in the face of the geo-political threats. This policy is backed up by coordination between the legislative authority (the National Assembly) and the executive authority (the government).
  2. Kuwait’s robust financial position and stable financial rating at AA
  3. The increase in bank profits, as well as the rise in the private sector’s deposits and credit are at their highest levels.

Meanwhile, there were a number of disturbing developments that can be summarized in three points:

  1. The geo-political conflict that affects most countries in the region and threatens the freedom of international shipping
  2. The global trade conflict, especially between the US and China, which affects the international trade and the expected global economic growth
  3. The main drawback for oil-producing countries, including Kuwait, is the 15% drop in oil prices since the beginning of this year ,which caused a deficit in the budgets of most of those countries

All this coincided with Eid al-Adha, which traditionally involves more travel and an increase in essential expenditure in the Kuwaiti society.

The citizens scored 108 points on the General Index, a 6-point drop, while the Arab residents settled at 99 points.

At the level of governorates, both Ahmadi and Farwaniya reported 110 points each; the Capital 105 points, losing 6 points within a month; Hawalli 99 points, while Mubarak El-Kabier posted only 91 points.

Meanwhile, the earners of a monthly household income of more than 2,850 Dinars plunged 26 points within a month.

High income earners less confident in economic situation

ARA Current Economic Situation Index reported 99 points, down 1 point within a month and 12 points compared with August 2018.

The Future Economic Situation Index reported 104 points, down 3 points within a month and 8 points year on year.

Analysis of research figures and data revealed that three categories were the most pessimistic about the economic situation. These categories, namely: the earners of a monthly household income ranging from 1,850 to 2,249, 2,250 to 2,849 Dinars and, more than 2,850 Dinars; plummeted 34, 28 and 28 points, respectively, on the Current Economic Situation Index and dropped 15, 35 and 41 points on the Future Economic Situation Index.

This evident slump amongst higher income earners reflects some concerns about the economic situation.

The drop in oil prices and its negative repercussions will logically affect the budget; whereby, if current prices stabilize and the volume of oil exports remains unchanged, then the 2019/2020 budget is expected to have a deficit that may exceed 3.1 billion Dinars. Accordingly, this deficit will negatively impact the level of consumer confidence, despite a number of achievements; such as, the growth of the Stock Exchange liquidity, the attraction of some foreign investments and the growth of the private sector’s credit.

Meanwhile, official figures indicate a 3.7% annual growth in real estate activity, with an expected further recovery.

Noticeably, the Current and Future Economic Situation Indices dropped among citizens by 4 and 5 points within a month.

However, the relative stability of both indices is still considered acceptable, despite the geo-political pressures, the fall in oil prices and the strained global trade relations,

Stagnant salaries reflect on personal income indices

The Current and Expected Personal Income Indices maintained their previous ratios, with the first posting 102 points, up 1 point within a month, and the second recording 106 points, dropping 1 point.

The two indices dropped 6 and 3 points, respectively, year on year.

Both indices were therefore stable, compared to last July.

Research findings revealed considerable discrepancy among the various research components, specifically in regard to their assessment of personal incomes. Nearly 50% of respondents expressed dissatisfaction with the expected personal income, reflecting their concerns about the future income levels.

The stability of the Current and Expected Personal Income Indices is based on salaries that were nearly stagnant in between 2017 and 2019. Salaries in the government sector saw a small increase of 2%, while most salaries in the private sector saw no adjustment during that period.

The citizens dropped 1 point on each index, while the Arab residents gained 5 points on the first index and lost 3 points on the second.

Discrepancy was obvious among governorates whereby,  the Current Personal Income Index dropped 16 points in the Capital, but increased 23 points in Hawalli.,.

This disparity is partly due to the nature of the current economic activity in each governorate and/or the growth reported in some economic sectors.

Labor market activity contracts

ARA Current Employment Opportunities Index registered 140 points, down 13 points within a month and 34 points within a year, thus reflecting a state of contraction in the labor market activity as well as in the current employment opportunities.

Research figures indicate that the professionally and educationally unqualified workforce is the category that complains the most about the lack of employment opportunities at the present time. This index dipped 35 points within a month among the earners of a monthly income of less than 450 Dinars.

The holders of secondary education qualifications also dropped 26 points within a month.

The contraction in the current labor market activity and the drop in demand for some workforce segments are essentially due to the financial and economic repercussions of the fall in oil prices (by about 15%) this year, as well as the real estate sector’s failure overcome its stagnation.

The labor activity in several industrial, commercial and service sectors is closely linked to the real estate sector.

Semi-consensus on low level of consumption

The ARA Purchase of Durable Goods Index recorded 89 points, a 25-point slump within a month and 47 points year on year, thus hitting the lowest ratio in years.

It seems that a number of factors have contributed to this plunge, notably the drop in oil prices, the geo-political tensions and their impact on the psyche of consumers, in addition to the global trade tensions; which negatively affect the volume of world trade as well as the expectations about the global economic growth over the next period.

There were also some domestic factors, most notably the Eid al-Adha holiday in the middle of summer, which entailed an increase in travel expenses; whereby, more than 270,000 people travelled during this period, despite the upsurge in travel costs by over 200% in some cases. This came as the Dinar’s foreign exchange rate remained steady, and the annual inflation rate did not exceed 1.15%, which somewhat protects  the consumers’ purchasing power. Nonetheless, the Purchase of Durable Goods Index dropped 37 points, within a month, amongst citizens. The index also dropped on the governorate level whereby, Ahmadi plummeted 58 points within a month.

The drop in consumption could be attributed to this period’s travel surge and the associated travel expenses. Nonetheless, to confirm this theory, the level of consumption should be monitored and compared to the readings of the upcoming months.

 
 

Lexus Design Award 2020: Call for Entries Now Open
• Lexus continues its commitment to nurturing up-and-coming designers by launching the eighth Lexus Design Award
• The program offers a unique opportunity for six finalists, handpicked and mentored by some of the most respected names in the design industry
• Prototypes to be showcased to a global audience at the world-renowned Milan Design Week

Announcing the launch of Lexus Design Award 2020, Lexus International is calling talented creators to submit their entries to its annual design competition. Now in its eighth year, the prestigious award provides a unique platform for aspiring designers to demonstrate and further develop their talents.
Founded in 2013, the program continues to evolve and inspire innovations in design that lead to a better tomorrow, and each year has seen a steady increase in the number of entries from across the world. Last year, creators from 65 countries submitted 1,548 design proposals, many of which leveraged the power of technology.

Inspired by its “Design for a Better Tomorrow” directive, Lexus is looking for design that goes beyond the mastery of shape, form and function, and anticipates the future needs of individuals and society, by incorporating three principles fundamental to Lexus; Anticipate, Innovate,and Captivate.

“We are excited to launch the eighth edition of this celebrated award and invite ground-breaking and captivating entries from emerging creatives who will benefit from this opportunity to translate their ideas into new possibilities under the expert guidance of acclaimed professionals,” said Yugo Miyamoto, Chief Representative, Middle East and Central Asia Representative ‎Office, Toyota Motor Corporation. “Breaking conventions and going beyond the boundaries of imagination are at the heart of Lexus’ approach to design, and the Lexus Design Award offers us an opportunity to take this approach forward and continue our passion for creating amazing experiences that ignite the emotions. We would like to thank all of the design enthusiasts and past participants for contributing to the long-standing success of this program and inspiring Lexus and this year’s entrants to scale new heights of creativity.” In early 2020, Lexus will announce the six finalists who will go on to participate in an extraordinary and exclusive mentorship program in New York City, under the guidance of prominent design leaders from a variety of design fields. With an individual production budget of up to JPY 3 million (over USD 25,000), each finalist can develop their design concept into functional prototypes, which will be exhibited at the Lexus design installation at Milan Design Week 2020. The Lexus Design Award will conclude with the announcement of the Grand Prix winner following the presentation of prototypes by each of the six finalists on a world stage during Press Day at Milan Design Week. The complete list of Lexus Design Award 2020 judges and mentors will be announced in the fall of 2019. Entries to the Lexus Design Award 2020 competition will be accepted through October 14, 2019. Please visit LexusDesignAward.com for additional information.

 

 
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