Khaberni - After four years of consecutive increases in spending, "consumption" activity in Kuwait slowed noticeably during the first 9 months of this year, as citizens' and residents' spending decreased to 34.35 billion dinars (worth 1.68 billion dinars) compared to 36.03 billion dinars in the same period last year.
The decrease affected most payment channels, whether through websites or ATM transactions, with cash withdrawals declining by 10.56% to record 6.8 billion dinars compared to about 7.6 billion dinars during the corresponding period of 2024, a decrease of about 807 million dinars. Meanwhile, spending through websites declined by 8% from 14.3 billion dinars to 13.11 billion. The only exception was point of sale devices, which registered a growth of 3% reaching 14.39 billion dinars compared to 13.98 billion dinars in 2024, according to data from the Central Bank of Kuwait.
The recent decline in consumer spending marks a worrying signal for the small and medium enterprises sector in Kuwait, especially as this sector is still trying to regain its balance after the shock of the COVID-19 pandemic. These enterprises, which rely heavily on the local consumption cycle, were the most affected by periods of lockdown and health restrictions, then by rising operational costs subsequently with the wave of inflation and disrupted supply chains.
Small businesses are directly affected by every change in the consumer mood, as they rely on daily sales and quick cash flows, unlike large companies that possess reserves or stable financing sources. With a decrease in local market demand, these projects become the weakest link in the economic cycle, where sales decline while operational obligations remain constant or rise.
This decline can be read in light of two opposing phases: a phase of consumption expansion that followed the "Corona" pandemic since 2021, driven by deferred demand and rising incomes and liquidity, then the current correction phase that reflects a broader tendency toward caution in spending, under the influence of tightening monetary policies and slowing global growth and changing priorities of families between spending and saving.
If the decline in consumer spending continues, it could mean entering a phase of "consumption slowdown" which requires well-considered intervention by policymakers, through stimulating local demand, facilitating access to financing, and activating support programs targeted at small and medium enterprises. The success of these enterprises is not only measured by their ability to survive but by their ability to create a productive local environment that enhances economic diversity and reduces dependence on government spending as the sole driver of growth, and with each decline in spending, this sector loses its opportunity to shift from "fragility of survival" to "strength of impact" within the Kuwaiti economy.
And here are the details:
Spending this year marked a noticeable slowdown, as citizens' and residents' spending decreased by 4.66% during the first nine months of the current year, amounting to 34.35 billion dinars compared to 36.03 billion dinars in the same period last year, according to data from the Central Bank of Kuwait. The decrease also included most payment channels, whether through websites or ATM transactions. Cash withdrawals decreased by 10.56% to register 6.8 billion dinars compared to about 7.6 billion dinars during the corresponding period of 2024 with a reduction of about 807 million dinars. Meanwhile, point-of-sale devices were the only exception, registering a growth of 3% to reach 14.39 billion dinars compared to 13.98 billion dinars in 2024.
Spending through websites also declined by 8% from 14.3 billion dinars to 13.11 billion.
This decline can be viewed in light of two opposing phases, a phase of consumer expansion that followed the "Corona" pandemic since 2021, driven by deferred demand and rising incomes and liquidity, then the current correction phase reflects a broader inclination towards caution in spending, under the effect of tightening monetary policies and slowing global growth and changing priorities between consumption and saving.
In recent years, the path of spending has revealed a gradual shift in the financial behavior structure within the Kuwaiti community. In 2019, cash was dominant, accounting for about 49.3% of the total spending of 18.88 billion dinars, worth 9.32 billion dinars, followed by payments through point-of-sale devices at 8.16 billion dinars, while electronic payments through websites were limited to only 1.39 billion dinars.
Today, the scene has completely reversed; cash is declining, and digital transactions are expanding, but the total spending volume has begun entering a new cycle of balance after years of consumer rush. This slight recession does not necessarily reflect a weakness in economic activity, but rather indicates a maturity in financial behavior and a shift toward more selective and rational spending, where consumption is no longer an indicator of affluence only, but a part of the economic sustainability equation that has begun to form gradually in Kuwait.
Worrying Signals
The recent decline in consumer spending, despite its numerical limitedness, represents a worrying signal for the small and medium enterprise sector in Kuwait, a sector that is still trying to recover its balance after the shock of the COVID-19 pandemic. These enterprises, which greatly depend on the local consumption cycle, were the most affected by periods of lockdown and health restrictions, then from rising operational costs subsequently with the inflation wave and disrupted supply chains.
Since 2021, thousands of small enterprises have sought to return to the market confidently, benefiting from a recovery in digital spending and increased interest in electronic services and local applications, especially in the fields of restaurants, retail, and logistics. However, the recent decline in spending by 4.34% during the first nine months of this year has brought back the challenge anew, reducing profit margins and delaying expansion plans for many entrepreneurs.
Small enterprises are directly affected by every change in the consumer mood, as they rely on daily sales and quick cash flows, unlike large companies that possess reserves or stable financing sources. With a decrease in local market demand, these enterprises become the weakest link in the economic cycle, where sales decline while operational obligations remain constant or rise.
Stimulating Local Demand
Continuing this trend might signify entering a phase of "consumption slowdown" that requires well-considered intervention by policymakers, through stimulating local demand, facilitating access to financing, and activating support programs targeted at small and medium enterprises. The success of these enterprises is not measured only by their ability to survive but also by their ability to create a productive local environment that enhances economic diversity and reduces dependence on government spending as the sole driver of growth, and with each decline in spending, this sector loses its chance to shift from "fragility of survival" to "strength of impact" in the Kuwaiti economy.
Shift in Spending Philosophy
In times not long ago, "trust" was measured by what could be touched, implying that paper money was a symbol of security and a safe haven from doubts about digital systems. However, within just six years, this equation has radically changed, as cash has moved from being at the forefront of transactions to its margin, while electronic payments have become the preferred channel for spending and consumption.
The numbers speak not just on their own, but reveal a profound cultural and economic shift. Since 2019 until today, electronic payments through websites have surged by 838.2% to reach 13.1 billion dinars during the first nine months of the current year, from being just 1.3 billion dinars six years ago. Conversely, cash transactions have shrunk by 26.7%, from 9.34 billion in 2019 to 6.83 billion dinars this year.
Economically, this shift reflects a transition from "paper" to "code," from tangible money to programmed money. What is occurring is a shift in human perception of value itself, from something kept in a pocket to a concept managed through servers and networks. Money has not just become a commodity to be exchanged but has become "data" moving in a boundless space.
Technology.. and Financial Behavior
The rise of electronic payments is not merely a technical convenience but redefines the concept of liquidity and the economic cycle. Every click on a shopping website and every payment made through a phone is an implicit vote on a future where technology intersects with financial behavior, and trust is formed not from stamped papers but from secure codes and systems. Here, the new reality manifests, cash hasn't disappeared completely but has lost its symbolic power in a world where "numbers" are more present than "money," and "data" is more tangible than paper.
