Official bodies, including the Central Bank of Kuwait, have issued reports published in newspapers over the past nine months, indicating a decline in consumer spending in the country. First and foremost, this is a natural and expected situation, as recent government decisions did not keep pace with economic activity and continued to treat the matter as routine. However, current figures suggest this decline signals an emerging problem that can be easily resolved to revitalize spending. This can be achieved by reversing decisions that have negatively impacted economic activity, such as suspending licenses, withdrawing permits, and halting certain BOT (Build-Operate-Transfer) projects, which are vital drivers of domestic spending. It is globally recognized that there are two sides to strategic spending – domestic and foreign investments.
The government is the major spender because its projects stimulate markets and encourage consumption. Nevertheless, an overzealous pursuit of every violation, no matter how minor, to halt projects only breeds fear of the future, thus discouraging both investors and citizens from spending. At this point, there is a paradox: data on strategic partnerships with major countries while there is a decrease in spending. Large-scale projects necessitate stronger public-private partnerships for each sector to play its role effectively.
Undoubtedly, this necessitates flexible procedures and encouraging citizens to seize available opportunities to reap benefits, rather than, as we have previously mentioned, hindering investors’ work through seemingly arbitrary decisions. These decisions have negatively affected small and medium enterprises (SMEs), which are the natural link between the government, large projects and consumers. This sector is still struggling to recover from the crisis it suffered during the COVID-19 pandemic. There are many solutions to this emerging problem. Among the most important solutions are lifting the suspension of licenses, refraining from withdrawing permits and attracting investments. Furthermore, opening the door for local and foreign investors to spend on projects that can generate liquidity is crucial.
Combined with government spending, this will boost commercial, construction and service sector activities. Indeed, regulation is necessary, but it should be implemented gradually, not gradually, as it happened recently, which negatively impacted commercial, industrial and even agricultural activities. Prosperity begins with ensuring the foundations of stability, particularly by encouraging spending and creating incentives that allow investors and citizens to operate freely and without obstacles. The basis of this is the exchange of benefits between the State and its citizens, which contributes to expanding the investment base, leading to sustainable and inclusive economic growth, implementation of new projects, increased job opportunities, and ultimately, greater consumer spending. This also benefits the State, which collects taxes and fees, thus, contributing to further prosperity.
