A new study finds 86 per cent of residents are worried about their savings, as the UAE grapples with mounting personal debts.
UAE residents lament lack of savings
Almost 90 per cent of people across the Emirates believe they do not have enough money set aside for the future, and anxiety about savings is becoming increasingly acute, a study has revealed.
The National Bonds Savings Index found that 86 per cent of UAE residents were not confident in their current level of savings, with 46 per cent of those polled saying that over the past year they had set aside far less than they had planned.
Of the 501 UAE residents polled by YouGov Siraj, just under a tenth said they had made no attempt to save, with a majority blaming rising expenses and debt repayments.
A large part of the problem was inadequate education about personal finance, said Mohammed Qasim Al Ali, the chief executive of National Bonds.
"We have seen that while there is a willingness to save, there is a lack of understanding of how to save," he said.
Western and Asian expats saved more than Emiratis and other Arabs, the study showed.
The results show little improvement from last year, when the survey found that 83 per cent of UAE residents thought their savings were inadequate.
But the UAE's banks have lowered incentives to save during the year, as improved levels of liquidity have reduced the need for deposits to fund banks' activities.
For many customers, interest rates on their bank savings have fallen to below 1 per cent, or even zero in some cases.
Benchmark three-month interbank lending rates have fallen to a seven-year low as the rates paid on deposits have plummeted.
The national savings rate peaked in 2007 and fell to an estimated 31.1 per cent of GDP by last year, according to data from the Dubai Chamber of Commerce.
Lending to individuals has remained flat during the past year, rising 0.02 per cent to Dh244.3 billion (US$66.51bn) in the year up to April, with consumers aiming to pay off their existing debts, according to the most recent data from the UAE Central Bank.
The Merrill Lynch world wealth report recently cited the lower national savings rate as among the factors behind a reduction in the number of millionaires in the UAE for a second consecutive year.