Consumer confidence soars in the Middle East, which researchers attribute to a feel-good factor following the easing of the region's political unrest.
UAE consumers among world's most optimistic
Consumers in the Emirates are among the most optimistic in the world about their financial future, according to a new report.
The UAE and Saudi Arabia ranked within the top 10 most optimistic markets on the Nielsen Global Online Consumer Confidence Index, a study of 28,000 consumers in 51 countries. By contrast, European shoppers were found to be among the gloomiest.
Conducted between March 23 and April 12, the study measures consumer confidence in the job market, the state of their personal finances and their willingness to spend.
On the Nielsen scale, a score of more than 100 indicates optimism, while less than 100 indicates worry about future finances.
Saudi Arabia rose 11 points to 118 in the first quarter this year, becoming the second-most optimistic after India. The UAE's score of 109 was eighth, rising 12 points during the same period.
The IMF expects the UAE's GDP to grow at 3.3 per cent this year, while Saudi Arabia's economy is predicted to increase at 7.5 per cent.
Another country rising up the index is Egypt, where confidence increased 29 points to 102 following the ousting of Hosni Mubarak, the president.
"The joy of gaining civil and political freedom and experiencing the first truly free voting has raised consumers' expectations and hopes for faster economic growth," said Khaled el Tohami, the managing director of Nielsen Egypt.
The optimism comes in spite of the fact GDP forecasts have been slashed in the wake of the country's revolution, and it being in the midst of negotiating an IMF bailout to finance a budget shortfall of between US$10 billion (Dh36.72bn) and $12bn.
But Europe was much more miserable than the Middle East, with consumers in Portugal, Hungary and Greece among the most pessimistic worldwide.
Hungarians, Italians and Ukrainians were among those suffering the biggest drops in consumer confidence. While Greece's score fell just 3 points, it is the third-least optimistic nation overall.
But UAE retailers said they were cheered by an increase in consumer tastes for more expensive purchases.
Electronic goods such as BlackBerrys, iPhones and iPads are in great demand, according to Neelesh Bhatnagar, the chief executive of Emax Electronics.
"We're seeing more of an inclination of the consumer towards higher-end products," said Mr Bhatnagar.
"There seems to be a mood among the customer to go for high-end products, not the entry level."
UAE merchants made 7,147,435 point-of-sale transactions in the first quarter of this year, up 60.5 per cent on the same quarter last year, according to the Central Bank.
However, the large increase in consumer confidence in the UAE comes despite sluggish growth in personal lending, which increased just 0.3 per cent from December to March to Dh247.9bn, according to the most recent Central Bank data.
Much of the boost in consumer confidence may be accounted for by the resolution of political turmoil in some of the Middle East's largest countries, which in turn removed a significant question mark over the region's future, said Jarmo Kotilaine, the chief economist at National Commercial Bank.
"A lot of it has to do with this period of regional turmoil, which has, relatively speaking, come to an end and has been largely contained," he said, although Syria's unrest remained worrisome, he added.
Increased levels of disposable income as a result of steadily falling rental rates were a positive factor in the UAE's levels of consumer confidence, but not all indicators of the local economy were as bullish, Mr Kotilaine said.
"Bank lending has been quite cautious," he said. "It's been treading water for some time. Even there, there is good news in that the situation is not deteriorating."
Some of the policy measures intended to stave off unemployment and provide greater opportunities had also resulted in significantly improved growth forecasts for the region's countries, he said.