Consumers in the UAE have had their confidence shaken by the economic downturn more forcefully than those in any other Middle Eastern country.
Consumer confidence plunges
Consumers in the UAE have had their confidence shaken by the economic downturn more deeply than those in any other Middle Eastern country, according to a study released yesterday. The UAE was the only country in Bayt.com and YouGovSiraj's regional Consumer Confidence Index Survey to experience drops across all four indexes within the study. The most recent quarterly results, gathered in October and last month, marked the nation's third consecutive drop in consumer confidence this year. "We have been seeing a bit of a downturn in consumer confidence here for a while, but not to this degree," said Nassim Ghrayeb, the chief executive of YouGovSiraj, a market research company. "Consumers in the UAE have the worst perceptions of how things are going now, and looking ahead into the new year." He attributed the UAE's dark mood to a combination of high inflation in the past year, a high proportion of expatriates - who tend to feel more exposed than nationals during times of economic hardship - and a high level of visibility of the signs of economic downturn. "We are seeing a lot more layoffs in the UAE than we are anywhere else." The survey encompasses four main indexes: consumer confidence (CCI); consumer expectation (CEI); propensity to consume (PCI); and employee confidence (ECI). The index figures are calculated by comparing survey results against a base measurement taken in April last year. The UAE registered the largest decreases of any nation polled in two of these indexes: consumer expectation, which dropped 12 points, and employee confidence, which fell by 0.1 point - the only drop in the countries surveyed. Elsewhere, sentiment across the indexes among respondents polled was more upbeat. The Levant saw a significant improvement in the consumer confidence index (CCI), with Lebanon's performance up by 25.5 points, Jordan's by 21.2 points and Syria's by 5.1 points. The CCI is the most comprehensive index in the survey and measures consumer expectations and satisfaction using various elements of the economy including inflation, job opportunities and the cost of living. Mr Ghrayeb believed Lebanon's good CCI performance was a result of an improvement in the country's longtime economic hardships and the conservative policies of its central bankers. "The general population is less directly exposed to the economic downturn," he said. Residents in North Africa were also relatively confident, with Egypt, Morocco and Tunisia each moving up between 7 and 8 points. Algeria stood alone in North Africa, with its CCI dropping by 4.2 points, the biggest slide among the 10 countries surveyed. The UAE's CCI dropped by 3.4 points. The results for the Gulf were mixed. Bahrain and Qatar improved by 1.8 and 1.2 points respectively, while Saudi Arabia registered no change. However, Kuwait and Oman recorded a similar drop to the UAE, falling 3.3 and 3.4 points respectively. The survey found that respondents could not reach a consensus about whether they were better or worse off financially than a year ago, and most remained relatively positive about the future. The UAE moved down the index measuring consumer expectations (CEI) by 0.1 point, compared with Oman, which rose 4.4 points, and Lebanon and Jordan, which both increased an impressive 21.4 points. Respondents' optimism about their country's economic future was also mixed, although the UAE stood out with only 43 per cent saying they believe that the economy will be better in a year. Only Morocco (38 per cent) and Algeria (42 per cent) displayed less optimism. Bahrain and Oman showed the greatest decreases in their willingness to spend (PCI), dropping 18.3 and 17.6 points respectively, while the UAE's index dropped 8 points. Again, the Levant countries showed significant PCI improvements, with Lebanon moving up 19.8 points. Employee confidence (ECI) recorded drops in each of the Gulf countries, with the biggest again in the UAE, which saw a drop of 12 points. Confidence within the UAE about the current period as a good time to do business saw a marked drop in the survey, down to 15 per cent of respondents from 42 per cent in June. Sharon Horton, a business development manager at Select, a business management consultancy in Abu Dhabi, said she had not yet felt the economic downturn in her business, but had acquaintances who have had to pull back, including one chief executive who recently agreed to accept a significantly reduced salary. A UK native on contract in the UAE from Germany, she said other prospective expatriates would be thinking harder in the future about making the move here. "It's not all it's made out to be, the rags to riches thing. What you save in taxes you pay in rent here." firstname.lastname@example.org