Solid income growth boosts consumer spending and loans| MENAFN.COM

Tuesday, 09 August 2022 04:43 GMT

Solid income growth boosts consumer spending and loans

(MENAFN- Arab Times)  The consumer sector remained strong in 2012 and the start of 2013. Household debt growth accelerated further during the first quarter and consumer spending saw a pickup in growth towards the end of last year. Job growth also picked up in 2012, though the recovery remained relatively weak compared to previous periods. Despite this, household income growth remained strong as a result of large pay hikes seen earlier in 2012. Consumer and installment debt maintained a surprisingly strong pace of growth through the first quarter, ending the quarter at KD 7.3 billion. While net new loans in February were the lowest in a year at KD 51 million, this likely reflected a shorter month. In 2013, debt growth should get an additional boost from the recently approved "family fund" which we estimate could help generate up to KD 550 million in new lending as a result of the waiving of interest payments and maturity extensions. Consumer spending growth picked up towards the end of 2012, with salary hikes earlier in the year providing a strong boost. Growth in 2012 was weaker than 2011 due to a large cash grant paid during that year. Spending growth in 2013 should reflect strengthening job growth and solid growth in household borrowing. Job growth Job growth among civilian Kuwaitis was slightly better than the year before, driven by stronger private sector hiring. Around 12,300 new civilian jobs were reported during the year (2011: 11,200). Total civilian Kuwaiti employment grew by 4.4% in 2012 (2011: 4.2%). Growth was particularly strong in the private sector, with more than three times the number of new jobs compared to the previous year. This helped compensate for a decline in government sector hiring. Skilled expat job growth also picked up, again with the private sector being the main driving force, though the pickup remained relatively weak. Employed non-Kuwaitis with at least a secondary education rose by around 5,000 in 2012, growing by a relatively small 1.4% during the year. Total skilled employment stood at 347,000 at the end of 2012. While growth in expat hiring was the best seen since 2009, it remained relatively weak when compared to jobs added between 2005 and 2008, which averaged around 23,000 annually. Hiring of unskilled expats saw stronger growth reaching 6%, reflecting the overall pick up in the private sector. As a result of the large hikes in salaries during 2012, Kuwaiti household wage income growth was strong during the year. According to our estimates, aggregate household income growth reached 10.7% during 2012, a figure comparable to growth the year before. This growth estimate captures both employment growth as well as increases in pay.

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