The First Abu Dhabi Bank (FAB) Wealth Sentiment Index (WSI), a key gauge of how the wealthy in the UAE feel about their prospects, slipped 2.2 per cent month-on-month in August as tepid loan growth and lacklustre tourism weighed on feelings.
The measure fell to 1,017.37 in August compared to 1,040.66 in July, FAB said.
"The August score reflects a range of factors, including a surge in oil prices and an increase in stock indices," the report said.
"At the same time, a fall in tourism due to climbing summer temperatures and a drop in loan growth has negatively impacted the WSI."
While oil prices have been rebounding since the multi-year lows they touched in 2016, Brent crude oil, the benchmark measure of oil global oil prices, slipped 2.1 per cent in August as the US and other non-Opec members boosted production of the commodity. The UAE and wider Arabian Gulf relies on oil to fire up economic growth and the fortunes of the wealthy are closely tied to this commodity.
The latest figures on loans and advances for July show that, while lending grew, the rate of expansion for the first seven months of the year at 0.2 per cent was slower than the 0.5 per cent growth in the first seven months of 2016. Total loans and advances increased 0.2 per cent to Dh1.594 billion in July compared to Dh1.54bn in July 2016. Figures for loans and advances in August are not yet available.
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Tourism in the UAE has been on the rise this year as the US dollar weakened. That has made trips to the country more affordable as the dirham is pegged to the US dollar. But during the summer when temperatures can soar to as high as 50°C, many tourists shy away from touring the Gulf.
The WSI Council members polled said the movement of oil prices and geopolitics were the main factors affecting the UAE economy. Despite the dip in August, the members said they remained optimistic about the UAE economy but that they were taking a more cautious approach to their personal investments.
The WSI, the first of its kind in the UAE and Middle East and North Africa region, was launched in January 2017. The compilers use market sentiment based on fundamental and economic factors.
