'Central Bank': Non-Oil Private Sector Activity Improved in August

The Central Bank of Kuwait (CBK) has advised maintaining caution regarding economic performance prospects in the first half of the year, amid geopolitical and technological risks, alongside an improvement in non-oil private sector activity and continued growth in household spending, reflecting the resilience of domestic demand and its support for economic activity.

In its fifteenth specialized report for September 2026, titled “Sustainability in the Financial and Banking Sector: From Concept to Risk Management and Financial Stability Enhancement,” the CBK stated that its Purchasing Managers’ Index showed an improvement in non-oil private sector activity in August 2026, with household spending continuing to grow in July, reflecting the resilience of consumer demand and its support for economic activity.

The report revealed the CBK’s transition from guidelines to risk management by incorporating environmental, social, and governance (ESG) factors and climate risks into governance frameworks, strategies, credit processes, and stress tests, alongside developing an integrated sustainability framework for the Kuwaiti banking sector.

The CBK clarified that sustainability-related risks, particularly climate risks, can transmit to financial institutions through credit, market, liquidity, and operational channels, and their effects may extend more broadly to the financial system.

It emphasized the importance of identifying and measuring financial risks associated with climate change and considering them within the internal capital adequacy assessment process, alongside enhancing transparency through sustainability reporting.

The CBK called for conducting various scenarios for climate stress tests and integrating ESG considerations into credit and investment decisions when they have a material impact.

It explained that the importance of sustainability in the financial sector is not limited to green financing, but is linked to the performance and resilience of financial institutions, as sustainability-related risks can transmit through traditional risk channels, including credit, market, liquidity, and operations, and their effects can extend beyond individual institutions to impact the broader financial system.

The CBK views its sustainability efforts as proceeding along two integrated paths: a supervisory path aimed at developing banking sector practices in sustainable finance, climate risk management, ESG factors, disclosure, and data, and supporting innovation and fintech related to sustainability; and an institutional path to enhance sustainability, governance, and risk management practices within the Bank’s own operations.

The CBK continues to develop its approach in this field by strengthening sustainable finance and ESG practices in the banking sector, integrating sustainability and climate risk considerations into risk management frameworks, enhancing governance, disclosure, data, and capacity building, supporting innovation and fintech related to sustainability, and developing an integrated sustainability framework at both the Bank and sector levels.

At the institutional level, the CBK began operating a two-phase solar energy system, with the first phase launched in March 2024 and the second in September 2025. Renewable energy consumption reached approximately 14% of its total monthly energy consumption by the end of July 2026, alongside the system’s contribution to reducing carbon dioxide emissions.