Kuwait Consumer Spending Dips After Four-Year Growth

Background

Kuwait's economy has registered its first significant decline in consumer spending in four years, signaling a potential shift in market dynamics. Data from the Central Bank of Kuwait (CBK) reveals a noticeable slowdown during the initial nine months of 2025, prompting closer scrutiny from financial analysts and policymakers. This development marks a departure from the robust growth observed since the post-pandemic recovery.

Market Context

Total consumer expenditure reached KD 34.35 billion, a decrease of KD 1.68 billion, or 4.66 percent, compared to KD 36.03 billion in the same period last year. The decline was broad-based, affecting various transaction channels. Cash withdrawals saw the sharpest drop, falling by 10.56 percent to KD 6.8 billion, while online spending also dipped by 8 percent to KD 13.11 billion. Point-of-sale (POS) transactions, however, remained resilient, increasing by 3 percent to KD 14.39 billion.

Local Relevance

Economists interpret this downturn as a natural market correction following an extended period of heightened consumption between 2021 and 2024. That boom was fueled by pent-up demand, ample liquidity, and rising incomes. The current trend reflects a broader move towards financial prudence amidst tightening global monetary policies, a decelerating world economy, and evolving household priorities balancing saving and spending.

Outlook

This shift poses a particular challenge for Kuwait's small and medium-sized enterprises (SMEs), which are still navigating the aftershocks of the COVID-19 pandemic. Heavily reliant on domestic consumption, these businesses face vulnerabilities from reduced consumer activity, compounded by persistent high operating costs and inflationary pressures. The resilience of the SME sector is pivotal for Kuwait's long-term economic diversification goals.

Central Bank figures also highlight a structural transformation in Kuwaiti payment habits. In 2019, cash dominated, accounting for nearly half of all spending. Today, electronic payments have become the preferred method, with online transactions surging by 838 percent since 2019, reaching KD 13.1 billion. Conversely, cash transactions have fallen by 26.7 percent over the same period, underscoring a growing trust in digital financial systems across the GCC.

Experts caution that a sustained downward trend in spending could usher in a broader "consumer slowdown" phase. They advocate for proactive policy measures to invigorate domestic demand, streamline access to financing, and bolster support programs for SMEs. Strengthening these vital enterprises is essential not only for safeguarding employment but also for fostering sustainable national growth and reducing reliance on traditional revenue streams.