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Daily Economic Update
29.01.2025Kuwait: Growth in bank card transactions eased further in Q4 2024. Consumer spending – as proxied by the value of bank card transactions – moved lower for the second consecutive quarter in Q4 2024, dropping by 0.6% q/q to KD11.0 billion, official central bank statistics showed. Growth in annual terms slowed to 0.8% y/y from 4.6% in the previous quarter, the slowest since the depths of the Covid-19 pandemic in 2020. For 2024 as a whole, spending came in 4% higher than in 2023 but under half the rate of growth recorded in the previous year and was the third consecutive year of easing. With growth now running well below its historic trend of around 9%, we think the slowdown in consumer spending in the past few years has mostly run its course and growth should be more stable ahead – though a sharp pick-up for now seems unlikely. Supportive factors for 2025 should include improved broader economic growth prospects, moderating inflation and potentially lower interest rates.
Kuwait: New housing regulations for workers, capping occupancy at four per room. The Public Authority of Manpower (PAM) has announced new regulations for employers to ensure better living conditions for workers. The new regulations stipulate that the number of occupants per room should not exceed four and employers that fail to abide by this will have to offer housing allowances equal to 25% of the salary for minimum wage workers and 15% for those earning above the minimum wage. PAM also emphasized that employers must secure prior approval before providing housing for workers. Amid a shortage of affordable housing for low paid blue-collar workers, this decision could lead to further upward pressure on rents that have already seen some appreciation after the implementation of stricter housing regulations following the Al-Mangaf fire in June last year.
Saudi Arabia: PIF finalizes $4 billion bond sale. The Public Investment Fund (PIF) declared the finalized the pricing of a $4 billion bond offering. The offering is in two tranches of $2.4 billion with a five-year tenor, and $1.6 billion with a tenor of 9.5 years. Funds generated from the issuance will be used for general corporate purposes. The issuance, part of PIF’s Euro Medium-Term Note Program, was four times oversubscribed with orders of about $16 billion, reflecting the strong investor demand from a range of global investors. Debt issuance by the PIF will likely be buoyant in 2025 as the fund seeks to finance its expanding domestic investment portfolio in line with vision 2030 goals.
US: Core durable goods orders rise, and house prices continue to increase. Durable goods orders fell 2.2% m/m in December after dropping 2% in November, mainly driven by a steep decline in commercial aircraft. However, core goods orders (non-defense and excluding volatile aircraft orders) increased 0.5% following a 0.9% rise in November, with shipment of such goods posting 11-month high growth of 0.6% m/m, suggesting business equipment spending remained relatively firm at the end of the year. Meanwhile, house prices, as per the S&P Case Shiller 20-city index, rose at their fastest pace in five months of 0.4% m/m in November. On an annual basis, price rises slightly accelerated to 4.3% from 4.2% in October. Despite worsening affordability, existing house prices have shown a cumulative increase of 11% since January 2023, underscoring strong demand for housing amid a lack of residential unit inventory for sale. However, the recent uptick in mortgage rates (to around 7%), if is sustained, may dampen demand, likely keeping further price increases more moderate. Finally, the Conference Board’s measure of consumer confidence fell to a four-month low of 104.1 in January from December’s 109.5 on rising inflation expectations and deteriorating perceptions about job market conditions. Post the US election last November, various consumer surveys seem to have been influenced by respondents’ own political leanings, with better optimism amongst Republicans but more pessimism amongst Democrats.