Business | Markets
GCC residents still spending despite global gloom
Local and expat consumers in the UAE and Saudi economies still perceive resilience and strength, survey by Booz and Co finds.
- By Nadia Saleem, Staff Reporter
- Published: 23:00 May 14, 2009
Dubai: Despite the global recession influencing the region, Gulf Cooperation Council (GCC) residents have maintained their pre-recession spending levels.
With a widespread drop in global consumer spending, the UAE and Saudi Arabia saw an impact on only 28 per cent of its spenders, a research study shows.
Some GCC consumers report fewer shopping trips, buying more sale items, and putting luxuries and other big-ticket purchases on hold.
"Reductions in spending however are still not widespread - they are concentrated within a relatively small portion of the population, suggesting that some consumers believe their local economies can remain resilient despite gloomy global developments," said Gabriel Chahine, a partner at Booz & Company.
It said that only 28 per cent of spenders reduced their spending in the past six months, while 26 per cent increased, cancelling out the change and thereby maintaining spending levels.
"Such comparatively strong spending could suggest that consumers in the region still perceive resilience and strength in their local economies," he said.
In the UAE, 55 per cent of consumers have maintained consistent spending levels since the economic crisis began. Another 37 per cent have reduced spending, and nine per cent are spending more.
In Saudi Arabia, the consumer spending is more resilient with 36 per cent of the consumers maintaining their spending levels, while 20 per cent have scaled back, but 43 per cent report spending more.
The survey showed that increased spending levels don't necessarily stem from increased splurges on luxury goods, but rather from increased needs and from inflation.
The report clarified that most of the reduced spending is not being forced on consumers but is led by uncertainty over the economy.
"Even if many consumers haven't been directly affected by the economic slowdown, they are overwhelmingly aware of it," he said.
Some 59 per cent of UAE consumers, and 46 per cent of consumers in Saudi Arabia, report concern or serious concern about the economy, numbers that are lower than in other countries, the report said.
"A possible explanation for the relative unconcern in Saudi Arabia is the trust people have in the government as a continued source of employment," it said.
Chahine said that because the survey is a mid-recession gauge, it's not meant to be predictive. "If the financial crisis deepens, GCC consumers could be more profoundly affected," he said.
How have your spending habits changed over the past few months? Are you avoiding spending on luxury goods or holidays?
Your comments
I have always believed in maintaining a fixed standard of living. Even if my financial standing improves, I would still be spending what I used to spend earlier. I do not believe in living only for the moment and always have had the habit of saving for the rainy day. So when there is a financial crunch, I just dip in to my savings and maintain my regular spending habits. I do not buy anything for the sake of buying and am not a compulsive spender. So even with the global economic crisis, I have been able to spend like always. There are ups and downs in life, but we need to maintain a balance so that we are not too much above or too much below and are able to live a peaceful life.
Naina Nair
Sharjah,UAE
Posted: May 15, 2009, 01:44
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