Consumer sentiment brightens in UAE

Dubai: Despite global economic uncertainty and rising cost of living, consumers in the UAE are now more optimistic about the second half of the year than they were a few months ago, according to a consumer confidence survey.

The latest MasterCard Worldwide Index of Consumer Confidence for the second half of 2008 reveals that consumer optimism in the country has picked up from 78.5 six months ago to 85.4, indicating that consumer sentiment is "overall positive and optimistic."

Denzil Lawson, MasterCard Worldwide general manager for the Middle East and Levant, said UAE is the only surveyed country that posted an increase in consumer confidence.

The survey, conducted in March-April 2008, shows that overall sentiment has slightly dipped across the Middle East and Levant, probably influenced by the continued uncertainties about fallout effects of the US credit crunch, the declining dollar, increasing oil prices and rising inflation. Consumers' feelings about employment in the UAE have also improved, as index score for sentiment on the job situation increased from 85.6 six months ago to 95.8 in the current survey. The UAE residents are also more buoyant about the economy now as the index for this category went up from 87.1 to 89.9.

Likewise, consumers seemed to be more optimistic about their salaries. The index score for regular income rose 20.4 points from 70.3 in the first half of 2008 to 90.7.

Quality of life

With regards to quality of life also, things look positive as consumer sentiment grew from 75.9 to 85.3. However, sentiment on stock market has declined from 73.4 to 65.2

"So, what this tells us is that in the next six months, people in the UAE will continue to spend at the same furious pace," Lawson said.

Lawson said the construction boom in the UAE, the price controls imposed by the Ministry of Economy as well as the property rent cap have contributed to the growth in consumer optimism.

"We're seeing some price controls and a lot of asset growth here. The rent cap is also playing a big help," Lawson told Gulf News.

Conducted twice a year in key markets across South Asia, Middle East and Africa, the survey commissioned by MasterCard Worldwide analyses consumers' perceptions of economic conditions over the six months ahead.

The scores, ranging from zero to 100, are based on responses on five variables: employment, economy, regular income, stock market and quality of life. A score above 50 indicates consumer optimism while a score below 50 signals pessimism.

Despite declining consumer sentiment in other countries, the UAE still ranks third in the overall list, with Kuwait and Qatar occupying the first and second slots.

"Consumers in Kuwait remain highly optimistic, but a little less so than six months ago [89.4 versus 93.3]. However, it still tops the list with the highest consumer confidence. Qatar, which was surveyed for the first time, comes second with an index score of 88.6," MasterCard Worldwide said in a statement.

India, where the confidence level dropped from 86.6 to 82.1, ranks fourth. Occupying the fifth spot is Saudi Arabia, where people's sentiment about the economic climate dropped from 92.2 to 80.1

In South Africa consumer optimism declined from 83.7 to 74.3, while in Lebanon residents have become more pessimistic as index level plunged further from 38.7 to 32.

Following Lebanon's path is Egypt, where consumer sentiment fell hard from 65.9 six months ago to 32.3 in the present survey.