Record fall in consumer confidence

Armina Ligaya

• Last Updated: March 30. 2009 9:30AM UAE / March 30. 2009 5:30AM GMT

DUBAI // Consumer confidence in the UAE has dropped to the lowest in the region, according to a survey released yesterday.

The latest quarterly poll by the research firm YouGov and employment website Bayt.com shows the UAE slipped a record 15 points on its Consumer Confidence Index (CCI), from 74.9 in November to 59.9 last month. Kuwait had a steeper drop, at 16.7 points, from 81.9 in November to 65.2 last month.

“The UAE and Kuwait were in a boom period two years back,” said Vivek Wagle, a research director with YouGov in Dubai. “So naturally in times of recession it is the biggest players that get hit the hardest.”

Mr Wagle said the sentiment slide stemmed from feelings of uncertainty as the economic slowdown hits the Emirates, but also because both the UAE and Kuwait have large populations of expatriates who were more vulnerable to job losses associated with the property and financial markets.

Consumer confidence fell 12 points in Bahrain, 8.9 points in Qatar, 9.7 in Syria and 8 points in Lebanon. In Saudi Arabia, consumer sentiment dropped by 0.9 of a point. Egypt dropped by 4.4 points while Algeria was the only country to rise, moving up the index by 1.5 points.

The UAE saw a dip across all consumer confidence indexes compared with the previous survey, in particular in the availability of jobs. In November, 29 per cent of all respondents were optimistic, but now only 3 per cent felt there were plenty of jobs available. One of the biggest drops was in the proportion of respondents who planned to buy a car or a house, said Mr Wagle.

In November, 32 per cent of people said they planned to buy a car, but that proportion dropped to 17 per cent.

A poll conducted by Maktoob Research, also released yesterday, found a similar trend, with 44 per cent of UAE residents saying they foresaw a deteriorating economy and three quarters of UAE respondents saying they had been affected by the slowdown.

“People have had to change their lifestyle, they are really trying to save money,” said Tamara Deprez, the general manager of the firm.

However, Laurent Patrick Gally, a consumer and retail analyst with Shuaa Capital, said the survey painted a bleaker picture than sentiment was now, as opinions were gauged when the economic mood in the UAE was at its worst.

Last month, US, European and regional financial markets fell and oil was hovering around $35 a barrel, he said. Consumers were also cutting spending after the holiday period.

“It’s not as good [now] as it used to be a year ago, but it has picked up in economic activity since a month ago,” he said.

Piyush Mathur, the regional managing director for the Middle East, North Africa and Pakistan at Nielsen, the media research firm, said the mood was dampened in the UAE, but it might still be better off than other countries in North America or Europe. “Definitely the sentiment is going down in the UAE,” he said.

“The part that is worth watching is if it is a steeper fall than some of the other countries in the world and if we are still relatively better off than the sentiment in the western world.”

aligaya@thenational.ae