Kuwait records drop in consumer confidence for first time since Q1 last year, latest Bayt.com and YouGov Siraj survey reveals

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Consumer confidence in Kuwait has dropped – marking the first decline in consumer confidence in the country since February 2009, according to the latest Consumer Confidence Index (CCI). The Consumer Confidence Index, a quarterly survey conducted by the Middle East’s number one job site Bayt.com in conjunction with research specialists YouGov Siraj, found that Kuwait moved down the index by 2.8 points.

Around the Middle East and North Africa region, half of the countries surveyed witnessed declines in their consumer confidence, with the other half showing positive improvements. Of those countries surveyed, Algeria recorded the largest increase in consumer confidence, shooting up its index by 12.1 points. Following behind, but at a lesser increase of 4.7 index points was Lebanon. Bahrain moved up the index by 2.0 points, while consumer confidence in KSA and Egypt increased slightly, as both countries moved up the index by just 1.0 point each. 

Moving down the index, Morocco showed the most significant decrease of 5.0 index points, which was followed by the UAE with a drop of 4.8 index points and Qatar with a minor drop of 0.7 points. Despite a significant improvement in consumer confidence in the last quarter; in the current wave Syria moved down the index by 1.4 points.

“The figures are interesting, because unlike many previous patterns where, for example, the countries of North Africa would each record a dip while the Gulf countries each showed an improvement, the latest data shows that there is little correlation between the countries of particular areas of the Middle East, demonstrating clearly how each country’s economy is completely independent – regardless of geographic proximity,” noted Amer Zureikat, Bayt.com’s Regional Manager.

The Consumer Confidence Index (CCI) is a measure of consumer expectations and satisfaction of various elements of the economy including inflation, job opportunities and the cost of living.

“Despite the steady and positive improvements that were recorded in consumer confidence in the last wave, the latest figures suggest that optimism related to the region’s economies emerging strongly from the global financial crisis has somewhat declined over the last few months,” commented Joanna Longworth, Chief Marketing Officer, YouGov Siraj. “In saying that however, the last couple of months have brought a number of challenges for some countries in the region according to news reports, but despite this, consumer confidence has not dropped as much as some people had probably predicted.”

To assess the CCI, the respondents are asked questions about their personal financial circumstances and how they feel they are doing – either better or worse – compared to the previous year. Among the respondents in Kuwait, just 20% said they are better off than last year. Furthermore, another 33% of Kuwait’s respondents said they feel they are worse off than the last year. Those feeling worst hit were respondents in Jordan and the UAE, where 42% and 40% respectively said their financial position was worse than the year before.

Of the countries surveyed, respondents in Oman and Egypt reported the largest improvements in their financial positions, with 34% and 33% stating their personal finances have improved since the last year. As for the other countries around the GCC, respondents in general do not feel that their financial position has changed for the better:  27% of respondents in KSA said that their financial position was better, followed by 26% in Qatar. Like Kuwait, just one fifth of respondents in the UAE feel they are in a better financial position compared to last year. 

In addition to financial position, consumer confidence is assessed by asking the respondents about their level of optimism towards the future. In the current wave, half of the countries surveyed moved up the Consumer Expectation Index (CEI), while the other half moved down.

Reporting the largest drop was the UAE which moved down by 3.6 index points, despite being the country that improved the most in the previous wave. Following the UAE was Morocco, which moved down the index by 2.5 index points, while Bahrain moved down the index by 2.1 points. Kuwait and Syria followed suit, with drops of 1.8 and 1.5 points respectively. Despite the index drops in the UAE, Bahrain and Kuwait, two of the other surveyed GCC countries, KSA and Qatar noted improvements – albeit minor ones – of 0.5 and 1.0 points respectively.

Asked how they expect their personal financial position to be a year from now, the respondents were largely optimistic that things would change for the better. Overall, 47% of respondents said that their personal financial position will be better, and as in the previous wave, just 8% of the region’s respondents expected their personal financial position to be worse. Kuwait was slightly above the regional average in terms of optimism: 49% of respondents said that things will be better a year from now. Most optimistic among those surveyed were respondents in Oman and Saudi Arabia – 57% and 52% respectively said their personal finances will be better next year.

In addition to anticipated improvements in their personal financial position, respondents remain optimistic that their country’s economy will be better in a year’s time. As in the previous wave, 40% said that their country’s economy will be better, compared to just 19% of those who said it would become worse. Currently, respondents in Oman, Qatar and Algeria are the most positive about the expected improvements in their country’s economy, with 55%, 53% and 51% respectively stating things will be better. In Kuwait, 47% of respondents believe that their country’s economy will improve in a year’s time, while just 15% said they believe things will become worse.

Respondents were subsequently asked what they feel their propensity to consume is, as part of the Propensity to Consume Index (PCI).  Around the region, the surveyed countries varied significantly. Continuing the trend, the UAE moved down the index by 10.0 index points – the largest drop among the surveyed countries. At the other end of the spectrum, Bahrain recorded an overwhelming increase, moving up the index by an astonishing 26.7 index points. Following from Bahrain’s index improvement was Algeria, which noted a significant 13.9 point move up the index. The picture was relatively bleak around the rest of the Gulf. KSA was the only GCC country to see an improvement in the index, moving up by 2.2 points. Kuwait and Qatar both reported moves down the index by 7.5 and 6.2 index points respectively.

“The survey also asked the respondents whether it is a good time to buy consumer durables, and they largely agreed that it is not: just 20% said it was a good time to buy, 40% agreed it was a bad time to buy and 31% agreed that it is a neutral time to purchase goods such as televisions or refrigerators,” explained Longworth.

The Employee Confidence Index (ECI) measures the attitudes of respondents to the local job market, in terms of their satisfaction towards the availability of jobs and their satisfaction with their salary. Continuing its run of improvements across indices, Algeria was the country that noted the highest improvement, moving up the index by 7.2 points, despite a considerable drop in the last wave. All of the countries in the Gulf, with the exception of KSA, moved down the index, most notably by 6.6 points in Qatar and 4.9 in Bahrain. Kuwait moved down the index by 3.5 points, contrasted with KSA’s improvement of 0.6 points.

In line with the previous wave, respondents are roughly divided as to the future availability of jobs: 29% believe that there will be more jobs available in a year’s time, while an equal 29% disagreed. Respondents in Qatar and Oman were feeling most positive about the future availability of work; with 43% and 41% believing things will be better in a year. At the other end of the spectrum, those feeling most pessimistic about the future availability of work were respondents in Bahrain and Jordan: 40% and 35% respectively said job availability would be worse after a year. In Kuwait, 39% of respondents believe more jobs will be available in a year’s time, and 24% expect the job situation to get worse.

Salary, vis-à-vis cost of living, continues to be an issue among the respondents: 63% said salaries haven’t kept pace with the cost of living, an increase of three percentage points from the previous wave. However, 18% of respondents agreed that salaries have increased in line with the cost of living, an increase of one percentage point from the previous wave.

“Each quarter, we conduct our consumer confidence survey in order to chart how consumer confidence levels are changing as the region goes through different economic cycles, and faces the challenges and pressures wrought by economic trends and events across the globe,” explained Zureikat.

“This seeks to provide up-to-date information that is both relevant and reliable as a snapshot of current market trends. We hope that in collecting this data, we can provide all stakeholders – from regional businesses to local organisations and HR professionals – with enough information that they can apply to their own organisation, to enable them to take advantage of current market conditions, and further benefit from the challenges or opportunities that they might present,” he added.