Debt on the increase with UAE residents
According to research by the National Bank of Abu Dhabi (NBAD), debt has risen in the UAE since 2015, going from AED400 billion to AED430 billion. The rise of 7.5 percent indicates more spending on credit cards, car loans, personal loans and business loans. NBAD reports that the average resident is now AED42,600 in debt.
Earlier this year finance comparison site compareit4me, who are based in the Middle East, carried out a survey on the spending and saving habits of UAE residents. They found that 53 percent of people who responded to the survey don’t think that they earn enough money to allocate any funds to a savings account, which could explain why debt is on the rise.
Breaking down this figure further, over half of respondents don’t set aside money for retirement or emergencies, while 30 percent don’t save any money whatsoever. However, of these people, 13 percent said that life’s too short to save, indicating that financial problems aren’t a barrier.
Perhaps unsurprisingly, most financial worries were attributed to not earning enough money. Credit card debt and loans were high up on the list of concerns. Lee Carey, partner in The Wealth Practice at Holborn Assets in Dubai, warns that credit card debt should be avoided if at all possible. “Do not get into credit-card debt. It can build quickly and the interest alone is money wasted,” he said.
This comes after a report by Arabian Business in January 2016 that said local UAE lenders were cracking down on British and American expats who leave the country without settling loan repayments. “In response to a growing number of fleeing debtors, banks such as Emirates NBD, ADCB [Abu Dhabi Commercial Bank] and others have been increasing their recovery efforts by employing international debt collectors and enforcers,” Radha Stirling, a legal consultant specialising in the Middle East, told Arabian Business.