The consumer sentiment in the UAE may be improving, but many of the residents in the country still have reservations about the overall economic situation and they are now taking serious steps to boost their savings.
According to a survey conducted by Nielsen between August and September this year, nearly seven out of 10 (66 per cent) people in the UAE have changed their spending in order to cut down on household expenses, showing an increase of seven points from the previous quarter.
When asked how they want to utilise spare cash after covering essential living expenses, 51 per cent of the respondents said they will set aside the money in a savings pot. Only a small proportion, about a third (27 per cent), said they will use any leftover funds to buy new clothes, while 23 per cent picked holidays and vacations.
However, investing in shares of stocks/mutual funds and retirement funds were among the least of consumer priorities, capturing only 13 per cent and 9 per cent of the respondents’ votes respectively.
Arslan Ashraf, Nielsen managing director at Arabian Peninsula, said that while consumers in the UAE are optimistic about economic progress on certain fronts, they are “still cautious in their spending due to the global economic challenges and geo-political situation in the region.”
“UAE consumers are conscious of the economic situation and respondents reported an increase in plans to save for the future,” he added.
Nevertheless, the consumer confidence level in the UAE is expected to increase in the next few months as the economic fundamentals in the country are starting to improve.
Ashraf said the residents’ optimism is also being buoyed by expectations that the UAE economy will benefit tremendously if it wins the right to host the coveted Expo 2020.
“We anticipate a growth in the UAE market as market fundamentals are showing steady improvement. The sense of optimism is further boosted with expectations that Dubai’s bid for Expo 2020 will be successful,” Ashraf told Gulf News on Monday.
Nielsen’s survey showed that more than half (56 per cent) of residents in the UAE believe the country is not in an economic recession, whereas in the rest of the Middle East, Africa and Pakistan (Meap) region, the overwhelming majority (74 per cent) said they are not out of the woods yet.
“The general concern over the stability of the economy is not evident in Dubai, there is strong belief that the platform for growth in the UAE is strong and resilient,” Colin Beaton, managing director of Limelight Creative Services, said.
Nielsen earlier reported that the consumer confidence index in the UAE increased four index points to 111 in the third quarter of 2013 from the previous quarter, emerging as the fifth most confident nation in the world. Residents in the UAE are the most optimistic in the Meap region, where overall confidence index stood only at 92.
The majority of UAE consumers (67 per cent) are positive about the state of their personal finances over the next 12 months, compared to 55 per cent in the Meap region.
Nielsen’s study also found that 63 per cent of UAE residents are optimistic about job prospects, while only less than half (40 per cent) in other Meap countries feel the same way.
Nearly half (47 per cent) of the country’s consumers feel it’s either a good or excellent time to buy the things they want over the next 12 months, compared to 37 per cent in the rest of the Meap region.