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Kuwait’s record performance tempered by costs

Kuwait growth inflation bagpipe player PMI Alamy
Inflation pressures: a Kuwaiti traditional musician plays a habbān, or Gulf bagpipes, while his companion plays a drum
  • Competitive pricing attracts customers
  • PMI rises to 53.2 from 52.7
  • Best performance since 2018

Rising inflation and increasing staffing costs are weighing heavily on Kuwait’s non-oil business sector despite growth, the latest business sentiment survey has revealed.

The seasonally adjusted S&P Global Kuwait purchasing managers’ index (PMI) revealed strong growth, with competitive pricing by businesses helping to attract new customers.

The index was up at 53.2 for March from 52.7 the previous month, above the 50 benchmark that separates growth from contraction.



Outside of the peak pandemic swings, this was the best performance since the series’s history began in mid-2018.

However, Andrew Harker, economics director at S&P Global Market Intelligence, cautioned that staff costs in Kuwait increased at the fastest rate on record, while the index also recorded the sharpest rise in selling prices for almost 2.5 years.

As a result, he said “the ability of firms to limit price increases to customers is being tested”.

Both business activity and new orders expanded at the fastest rate since July 2020. But hiring increased only marginally in March, the index showed.

Outstanding business has accumulated over the past 14 consecutive months.

“If new orders continue to flow in as they have been doing, firms will likely need to take on additional staff to prevent delays in the completion of projects,” Harker said.

Kuwait’s non-oil sector is forecast to increase by more than 3 percent this year, buoyed by refining gains and growing private consumption, an economic brief from the National Bank of Kuwait said.

However, the bank has cautioned that economic growth will remain flat or stray into negative territory as a result of deepening oil cuts.

Elsewhere in the GCC, Saudi Arabia’s business activity expanded to the greatest extent for six months, as companies reported strong increases in order books and new customers.

Output levels at non-oil businesses were also at their highest for six months, while new orders accelerated for the second successive month. 

Saudi dip

“Three times as many firms saw new business volumes rise than those registering a fall,” the report said.

The Riyad Bank Saudi Arabia PMI dipped slightly from 57.2 in February to 57.0 in March.

Egypt’s non-oil private sector economy deteriorated further at the end of the first quarter, with business activity and new order volumes falling.

Recent policy responses, however, meant that input price inflation was not as severe in March, supporting a slower increase in output charges.

The PMI increased from February’s figure of 47.1 to 47.6 last month “indicating a softer, but still solid deterioration in the health of the sector”, the report said.

Egypt’s international partners have pledged almost $60 billion in loans, grants and investment. The central bank has allowed the Egyptian pound to slide for the first time in more than a year, attracting foreign liquidity back into the market, and the government has agreed a long-delayed extended fund facility with the IMF.

Egypt’s central bank completed an emergency 6 percentage point interest rate rise last month and floated the Egyptian pound, which “did bring some relief to price pressures”, the report said.

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