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Consumer credit grows rapidly in Kuwait

Data released by the Central Bank of Kuwait earlier this month revealed that consumer credit grew in September at the fastest rate since 2006, an increase of 15.7 percent compared to last year.

Consumer credit grew on a monthly basis by 1.7 percent in September after a 1.4 percent increase in August. Overall domestic private sector credit, however, grew at a slower rate, with an increase of 5.6 percent compared to last year, the highest growth rate since December 2009, according to Global Insight.

The growth of trade and real estate loans also increased by 11.7 percent and 4.9 percent compared to last year, respectively. As the nation’s troubled investment companies seek to continue de-leveraging, credit to non-bank institutions grew by 15.8 percent compared to last year.

While domestic credit has shown signs of recovery after a stagnant period between 2009 and 2011, growth rates have not yet reached levels attained before the global financial crisis between 2001 and 2009, Global Insight reports.

Consumer credit has been growing since mid-2011, and consumer spending has also increased, a result of wage growth and government transfers to Kuwaitis after posting record-high oil profits. Growth is also demonstrated in consumer confidence levels and a resilient housing market.

Analysts expect private consumption to lead the way in driving GDP growth, indicating that consumer spending will show solid performance in the coming year, according to Global Insight.