KUWAIT CITY, Nov 4: After four years of consecutive increases, Kuwait’s consumer spending saw a marked slowdown during the first nine months of 2025, falling by KD 1.68 billion to reach KD 34.35 billion, compared to KD 36.03 billion in the same period last year, according to data from the Central Bank of Kuwait.

The decline, amounting to 4.66 percent, affected most payment channels, including online transactions and ATM withdrawals. Cash withdrawals recorded the sharpest drop, down by 10.56 percent to KD 6.8 billion from KD 7.6 billion a year earlier—a decrease of about KD 807 million. Online spending also dipped by 8 percent to KD 13.11 billion, compared to KD 14.3 billion in 2024. Point-of-sale (POS) transactions were the sole exception, rising by 3 percent to KD 14.39 billion, compared with KD 13.98 billion last year.

The slowdown comes as a warning sign for Kuwait’s small and medium-sized enterprises (SMEs), which continue to recover from the COVID-19 pandemic’s economic impact. These businesses—heavily dependent on local consumption—remain vulnerable to reduced consumer activity, having already faced high operating costs and disrupted supply chains amid inflationary pressures.

Small businesses are particularly sensitive to shifts in consumer sentiment, relying on daily sales and quick cash flow rather than long-term financial reserves. As domestic demand weakens, many of these enterprises find themselves the most fragile link in the country’s economic chain, with declining revenues and sustained costs eroding their margins.

Economists interpret the current downturn as a natural correction following the post-pandemic consumption boom between 2021 and 2024. That period was driven by deferred demand, abundant liquidity, and rising incomes. Today’s decline reflects a broader trend toward financial caution amid tightening monetary policies, slowing global growth, and shifting household priorities between saving and spending.

Central Bank data show that Kuwait’s spending behavior has undergone a structural transformation. In 2019, cash accounted for 49.3 percent of total spending—KD 9.32 billion of KD 18.88 billion—while POS transactions reached KD 8.16 billion, and online payments were just KD 1.39 billion. By contrast, electronic payments have now become dominant, while cash use continues to decline.

Online payments alone have surged by 838 percent since 2019, reaching KD 13.1 billion this year. Meanwhile, cash transactions have dropped by 26.7 percent over the same period, falling from KD 9.34 billion to KD 6.83 billion.

This transition reflects not only a technological evolution but also a shift in consumer trust—from tangible money to digital transactions. The Kuwaiti market is witnessing a new perception of value, where money is seen less as a physical commodity and more as data flowing through secure financial systems.

Experts warn that if the downward spending trend persists, the economy could enter a “consumer slowdown” phase. They call for targeted policy measures to stimulate domestic demand, ease access to financing, and enhance support programs for SMEs.

The resilience of the SME sector, they stress, is critical for Kuwait’s broader economic diversification. Strengthening these enterprises would not only safeguard jobs but also help transform them from fragile entities into productive forces contributing to sustainable national growth.