Dubai: UAE’s consumer confidence index dropped in the second quarter due to declining sentiment over job prospects and personal finances.
The latest Nielsen Consumer Confidence Index showed that the residents’ level of optimism is still highest in the Middle East and Africa region, but it dropped by seven index points from the first quarter to a score of 108. The quarterly decline is the biggest in six years.
Most UAE residents are now not in the mood to spend, with more than two-thirds (70 per cent) saying they are serious about finding ways to cut household spending. Consumers are extra careful not to overspend on clothes, as well as on “take-out” meals.
“All three confidence indicators [in the UAE]- sentiment about job prospects, personal finances and immediate spending – decreased in the second quarter which impacted purchasing intent among many consumers who are already cautious about spending,” Arslan Ashraf, managing director, Nielsen Arabian Peninsula, told Gulf News.
The downbeat report came amid news about falling oil prices, softening real estate and tourism markets, and growing concerns over government spending cuts. It’s now been more than 12 months since the price of crude started to drop. Residential rents and sales prices in the UAE have also been posting declines.
In Nielsen’s survey, UAE consumers said that losing their jobs is their top concern. Consumers are also concerned about their parents’ welfare and happiness, which emerged as the second-biggest concern, work/life balance (third), state of the economy (fourth) and children’s education and/or welfare (fifth).
“Job security concerns [in the UAE] are amplifying as lower oil prices can fuel expectations of government spending cuts,” Ashraf said.
“Additionally, two key sectors of the economy – real estate and tourism – are showing signs of softening. As such, consumers are saving more and spending less, intending to pull back spending on new clothes, out-of-home entertainment and home improvements expenses.”
Nielsen’s confidence index gauged consumer sentiment about local job prospects, personal finances and immediate spending intentions. It is based on the responses of more than 30,000 consumers with Internet access in 60 countries.
Consumer confidence in other countries in the region posted declines as well, dropping five points in Egypt to 85 and two points in Saudi Arabia to 105. Confidence levels in Pakistan (102) and South Africa (87) were unchanged.
Across the region, sentiment about job prospects increased by one percentage point, while sentiment about personal finances and immediate spending intentions declined by two and three percentage points, respectively.
