More UAE consumers opt to save as growth slows

Dubai: UAE consumers will cut back on their spending this year, with many of them trying to save for investment and retirement, a study has showed.

The latest MasterCard Worldwide Index of Consumer Confidence revealed that majority of the residents (75.58 per cent) are saving their money for "precautionary purposes." The figure is higher than the regional aver age of 64.81 per cent.

More than half of the residents (54.5 per cent) are saving for investment, while 44.99 per cent are setting aside some money for retirement. A smaller portion of the population (21.08 per cent) are saving for property-related expenses

In terms of purchasing priorities in the next 12 months, UAE residents (69.25 per cent) put buying or upgrading their property on top of the list.

Second on the spending list are fashion and accessories, which about 66 per cent of UAE consumers intend to prioritise this year. A lesser number, about 63 per cent, would rather dine and entertain themselves.

With the current economic crisis, some consumers are cutting back on unnecessary spending.

"In times like these, people should spend less on things that are not necessary. They should spend wiser, by spending their money on good, quality stuff at an affordable price," said Noemi, an expatriate working in Dubai.

"For now, I am not currently affected by the crisis. But I've been saving ever since I came here. So, if I choose to spend less, it's not because of this economic downturn, bur rather it's just my usual activity as an expatriate. But for those cautious consumers, there's nothing wrong with preparing for the worse situation," said Jay Sia, another expatriate from the Philippines.

Across the Middle East, majority of consumers are spending between 41 and 60 per cent of their total annual household income on household expenses. The trend is not the same for consumers in the UAE, where residents are spending only 21 to 30 per cent of their annual earnings on personal discretionary purchases.

Many consumers in the Middle East also do not believe their expectations on the increase in inflation will affect their spending this year.

More than half of the respondents in the Middle East plan to save between 11 and 20 per cent of their total income in the next 12 months.