Kuwait Financial Centre “Markaz” recently hosted a webinar in collaboration with the Kuwait Foundation for the Advancement of Science (KFAS), to discuss the impact of COVID-19 on Kuwait economy. The webinar, which was presented by Mr. M.R. Raghu, EVP and Head of Published Research at Markaz, addressed four key points, namely the impact of COVID-19 on the Kuwait economy, the implications on Kuwait based businesses, the importance of accelerating the adoption process of emerging trends and last but not least, what business leaders and owners need to do, to recover and build up their businesses given the current situation.
Mr. Raghu initiated the live talk by illustrating the overall impact of the pandemic, stating that the spread of the COVID-19 has impacted all dimensions of human life, from a physical, emotional and economic perspective. An overview of the ramifications of the pandemic on global markets and key sectors was also presented, with a detailed recap of all actions taken by the Kuwait government to combat the spread of the pandemic, highlighting various parameters, the level of impact as a result of these actions, supported by key policy recommendations and short to long terms suggestions. The sectors covered were banking, real estate, retail, SME, transportation and logistics, and telecom.
Mr. Raghu said: “As Kuwait navigates through the current lock down, businesses of all sizes and nature are grappling with the evolving crisis and trying to mitigate the challenge in various ways. Business leaders need to navigate a variety of issues from keeping their employees and customers safe, shoring up the balance sheet with ample liquidity to ride through the uncertainty amid falling or no revenues and reorienting operations to revising the business model.”
The importance of mobility as a key aspect of life and an interlink between various stakeholders was also addressed, with emphasis on the areas enabled by it, such as the supply chain, which impacts the movement of goods and services; transportation services as a means of granting access to students and employees, and fundamental life requirements, such as accessing basic food supplies, medical aid and others.
The impact on the Kuwait economy and businesses was clearly portrayed, where macroeconomic indicators were outlined, along with the multiple headwinds Kuwait is faced with, in terms of the fiscal deficit which is set to widen on back of lower oil receipts; oil prices that plummeted by 55% in March this year, and the expected job losses which were observed by sector in Kuwait. The impact on ‘Kuwait Household Expenditures’ and vulnerability of various sectors in Kuwait was also discussed, with a look at the sectors that can withstand the current social distancing and lockdown measures, based on the ability of each to operate and survive with the ‘work from home’ approach.
The webinar showed that hospitality, construction, retail, entertainment, and the oil and gas sectors have low ability to work remotely, as opposed to the banking, telecommunications and software and IT enabled services that would be able to operate remotely maintaining their key business functions. The sectors with high vulnerability towards the lockdown and social distancing measures constitute almost 67% of overall Kuwait’s economy, namely Oil & Gas, Real Estate, Education, Wholesale & Retail, Health & Social Work, Construction, Household, Hotels & Restaurants and Agriculture & Fishing.
In addition, the webinar addressed the key policy measures that have been taken by the Kuwait government and put forth measures that could be possibly implemented at a later stage. The measures were discussed across households/labour, corporations/organizations, financial sector, real estate sector and labor markets categories from the perspective of liquidity, solvency and legislative measures.
The webinar was concluded with a series of recommendations and thoughts shared by Mr. Raghu, where he highlighted that Kuwait is faced with multiple headwinds that are mutually reinforcing – COVID-19, low Oil prices and expected job losses. He added that economic costs will be immense with little or no government interventions, and that government spending should be swift and significant to safeguard the private sector. Another suggestion made was that monetary measures should extend beyond low interest rates and loan deferments to significant quantitative easing and capital support programs. In addition, fiscal measures should move beyond SME and cater to organizations of all size that have been affected by the crisis; ensure solvency through capital provisions to otherwise healthy firms and nurture healthier firms further to flourish and generate jobs, among a few other points.
Markaz continues to engage in strategic initiatives and activations, and share insights that support the overall development of the Kuwait economy. Markaz’s most recent input was with regards to a market study on the impact of mobility restrictions on the economy and different stakeholder groups.