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Kuwait Revenue Expected to Surge by 30 Percent as Consumer Confidence Reaches Record High in the UAE and UAE Conglomerate Spends Dh2 Billion on Expansion

Middle East : 30 August 2013

Revenue in Kuwait Set to Rise by 30 Percent

Strengthening oil prices and high levels of output combine to push revenue in Kuwait higher by almost 30 percent in the coming fiscal year. These conditions should result in a massive budget surplus, according to a study by NBK.

Forecasts put government revenue up 30 percent, driven by greater oil output levels averaging 2.7 million barrels per day or 23 percent higher than the previous year.

Crude export revenues will rise to a record high of Dh 219 billion as oil prices close the year much higher than the $70 per barrel budgeted average. This figure represents 93 percent of Kuwait’s total revenue.

According to the report, the government budget’s assumed deficit of KD 4.5 billion will turn into a KD 9.3 billion surplus.

Government spending is expected to reach KD 21 billion, down slightly from the previous year.

Current spending should drop by one percent, driven down by the forecasted seven percent y-o-y decline in goods and services expenditure and a drop in the cost of purchasing fuel.

Electricity provided to the domestic market accounts for 15 percent of overall current spending. Outside of this item, the budget for current spending forecasts an increase of one percent.

Both salaries and civilian wages are forecasted to rise by one percent, according to the NBK. This represents the smallest rise in several years.

A sharp drop in “supplementary appropriations” affects these increases, often used to finance spending commitments or as a contingency.

Capital spending is expected to drop by three percent, reaching KD 2.6 billion after two consecutive declines. Overall, lower spending goals indicate that a slightly contradictory fiscal policy exists within Kuwait this year.

Consumer Confidence Reaches Record High in the UAE

The MasterCard Index of Consumer Confidence scored the UAE’s consumer sentiment levels at 94.7. This confirms the condition of local equity markets, which reached a five-year high driven by jobs growth and recovery in real estate.

Consumer and business sentiment continue to be held up by growing numbers in trade and tourism. UAE consumers remain “extremely optimistic” over all five indicators included in the MasterCard index.

The most recent survey edition from six months ago shows that consumer confidence has risen in various aspects, such as the economy (moving from 94.6 to 96.8) employment (moving to 95.2 to 96.1), the stock market (moving from 86.9 to 92.8) and regular income (moving from 84.7 to 93.1). Consumers continue to be confident regarding quality of life (moving from 96.6 to 94.5).

According to the most recent results, female respondents remain more optimistic than males regarding the recent future (with a score of 95.4 compared to 93.9). Consumers over the age of 30 are also more confident than those younger (95.4 compared to 92.2).

The UAE has worked hard to create a reputation as a global destination. MasterCard’s UAE country manager, Eyad Al Kourdi, noted that consumer confidence continues to rise and has now reached an all-time high.

The ambitious plans, visionary leadership and promising growth within aviation, logistics and tourism have triggered a positive outlook and high levels of confidence.

All five indicators received positive scores around the Middle East, in spite of several small declines from the previous edition.

The highest levels of optimism remain in regular income (moving from 81.2 to 85.1), quality of life (moving from 76.7 to 79.9) the stock market (moving from 75.3 to 79.97) and the economy (moving from 79.3 to 80.0.) The aggregate score for the Middle East remains higher than levels reported in Africa (78.1) and Asia/Pacific (63.3) for the second report in a row.

Across the Middle East, Kuwait reigns with the highest level of consumer confidence (96.8) overtaking Qatar (96.4) and the UAE (94.7). Saudi Arabia, Oman and Egypt follow, with 93.3, 87.1 and 54.1 respectively.

MasterCard conducted the survey between April and May of this year, with respondents ranging in age from 18 to 64 and living within the MENA or Asia/Pacific regions. Since 1933, 41 surveys have been conducted.

Dh 2 Billion in Investments Marked for UAE Conglomerate Expansion

Western International Group continues with plans to invest Dh 2 billion into the aged structure. The firm employs 6,000 people now, with the possibility of hiring another 6,000 more over the coming three years.

Western International Groups Chairman KP Basheer noted that his firm had already put around Dh 1.3 billion into the company. Around Dh 1 billion of that was spent on retail expansions.

Western International started in Bahrain 25 years ago and now owns several brands, such as the hypermaket chain retailer Nesto. Nesto began in 2004, and products are currently re-exported to 80 nations. After moving the chain headquarters to Dubai, Nesto witnessed massive expansion.

Western International now operates 29 Nesto stores, including hypemarkets and supermarkets. Another multi-level hypermarket is scheduled to open in Sharjah, utilizing a Dh 200 million investment.

Basheer stated that the construction of the Sharjah facility represents the largest retail project yet for the company. Plans exist top open up similar stores in Abu Dhabi and Dubai, both places with low levels of retail presence for the firm. Western International plans to invest Dh 2 billion in expansions over the coming three-year period.

Western International sees Nesto as a leading player in the region, with at least 100 stores constructed or remodeled.

According to this plan, around 20 Nesto stores should be opening over the next three years, bringing the total stores in the region to 50 stores, by 2015.

Paul Holdsworth, Staff Writer, Gulf Jobs Market News
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