Dubai: The warning signs are flaring red for UAE's jewellery retailers, 2016 saw overall volumes at 43 tonnes, down 16 per cent on 2015's tally of 51.4 tonnes. This is also the first time that annual jewellery sales dropped below 50 tonnes since 2010, the previous lowest being the 2015 total. To put matters in perspective, the highest during this period was the 66.9 tonnes in 2010.
Saudi Arabia remains the biggest retail consumer of jewellery, closing 2016 at 56.4 tonnes as against the previous year's 69.5 tonnes.
Certainly, gold prices remaining stubbornly high for the better part of 2016 cramped consumer demand in the UAE. It was also hit by lower tourist arrivals, and since November 8, the virtual absence of high-spending visitors from India after that country instituted the demonetisation drive.
There could be other problems - just recently, authorities in Dubai removed the subsidy offered on jewellery imports. Now, they carry a 5 per cent duty. (Bullion carries no duty.) To date, jewellery retailers in Dubai have refrained from passing on the tariff increase on to their showroom prices, meaning that consumers are not feeling the pinch.
According to John Mulligan, Head of Member and Market Relations at the World Gold Council, "In some ways it is difficult to tell the immediate impact from the higher duty because of the generally weak demand in the market. But Indian (visitor) demand may be constrained and as such demand for jewellery from tourist traffic has been weak. A higher duty does not simplify the picture.
"But, going forward, the move will favour local jewellery fabricators because they will be exempted from any import duty."
